Angola's Central Bank Signals Reserve Use as Inflation Stands at 12.4%

*TL;DR – Angola’s inflation slowed to 12.4% in March, but the National Bank of Angola (BNA) warned it could deploy international reserves to defend the kwanza and is considering lower import taxes on food to ease household costs.*

Context Angola’s economy has been battling imported price pressures from higher fuel, fertilizer and food costs linked to global conflicts. The BNA, the country’s central bank, presented the IMF’s Sub‑Saharan Africa outlook in Luanda on May 7, 2026, and outlined its response to persistent external shocks.

Key Facts - Inflation fell to 12.4% in March 2026, down from double‑digit peaks earlier in the year, reflecting tighter control of monetary aggregates (the total money supply) and a steadier exchange rate. - The BNA set a 2026 year‑end inflation target of 13.5% and aims for single‑digit inflation in the medium term. - Governor Domingos Pedro said the bank monitors market liquidity through open‑market operations—buying or selling government bonds—and mandatory reserve requirements, adjusting supply to match economic demand. - Pedro warned that if external shocks such as the Middle East conflict continue, the BNA may use its foreign‑exchange reserves to stabilize the kwanza (AOA) and curb inflationary spillovers. - He also suggested the government consider cutting customs duties on food and fertilizers, and possibly reducing consumption taxes, to protect families from cost‑push inflation. - Angola’s sovereign bond (ticker: AOZB) traded at a 7.2% yield on the Johannesburg Stock Exchange, reflecting investor caution amid currency volatility.

What It Means Deploying reserves would signal a shift from pure monetary tightening to direct market intervention, a tool used by emerging markets to smooth sharp currency swings. Such a move could bolster the AOA against speculative outflows, supporting import‑dependent sectors and helping keep inflation below the 13.5% ceiling.

A cut in food import taxes would lower the landed cost of staples, directly easing pressure on household budgets. However, reduced tariff revenue could strain public finances unless offset by higher growth or fiscal adjustments.

Investors will watch the BNA’s next policy meeting for any formal reserve‑use announcement and for details on the proposed tax changes. The reaction of the AOA against the US dollar (USD/AOA) and the performance of AOZB will indicate market confidence in the bank’s strategy.

Looking ahead, the key indicator will be whether external shocks subside enough for the BNA to keep reserves untouched, or if a coordinated fiscal‑monetary response becomes necessary to push inflation into single‑digit territory.