Bank of Angola Raises Interest Rate After Currency Devalued

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Angola’s central bank raised its benchmark interest rate for a second time this year after the currency was devalued, stoking inflation.

The policy rate was increased by 50 basis points to 9.75 percent, the Banco Nacional de Angola said in a statement on its website late on Monday.

The bank lowered the official rate for the kwanza by about 5.8 percent to 116.8745 per dollar on June 5. The currency has weakened 15 percent against the dollar on the interbank market this year and was trading at 121.7819 as of 2:30 p.m. in Luanda, the capital. Inflation accelerated to 8.9 percent in May from 8.2 percent in the previous month.

Angola, Africa’s second-largest oil producer, is struggling to cope with a more than 40 percent plunge in crude prices in the past year. The government in February cut its 2015 budget by 26 percent to 5.4 trillion kwanza ($44 billion), while predicting the fiscal gap will reach 7 percent of gross domestic product.

The central bank also raised its standing lending facility rate to 10.5 percent from 10 percent. The next meeting will be held on July 27, it said.

Angola follows central banks in Kenya, Uganda and Ghana that have raised interest rates this year to curb inflation pressure, bucking a global trend of looser monetary policy. The South Africa Reserve Bank has indicated it may increase its repurchase rate from 5.75 percent in the coming months.

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