Angola raises benchmark rate to at least three-year high

Angola’s central bank raised the country’s benchmark interest rate to the highest in at least three years as the inflation rate climbed to more than 20 percent.

The benchmark rate was increased by two percentage points to 14 percent,

The Luanda-based bank increased the standing lending facility rate to 16 percent from 14 percent, while the overnight standing liquidity absorption facility rate rose to 2.25 percent from 1.75 percent.

Inflation accelerated to 20.3 percent in February, driven by higher domestic fuel prices and a weak currency. The kwanza has lost 17 percent of its value against the dollar since the start of the year, the worst performer of 23 African currencies tracked by Bloomberg.

“This move is likely to give the currency some temporary relief,” Celeste Fauconnier, Nema Ramkhelawan-Bhana and Neville Mandimika, analysts at FirstRand Ltd.’s Rand Merchant Bank unit in Johannesburg, said in an e-mailed note to clients. “Should the oil price resume its weakening trend, we anticipate a further rate increase in this half of the year.”

Oil-rich Angola, which has sub-Saharan Africa’s third-biggest economy, has seen its revenue and foreign income plunge due to the collapse of crude prices from their 2014 peak. Before the oil-price decline, it relied on crude for about 95 percent of its export income.

– Bloomberg