Angola’s Latest Interest Rate Decision: A Data-Driven Analysis and Macro Outlook
The Angolan central bank has lowered its key interest rate to 18.50% as of November 18, 2025, marking a notable shift after a prolonged period of stability at 19.50%. This report leverages the Sigmanomics database to contextualize this move within Angola’s broader macroeconomic landscape, comparing it with past readings and assessing implications across monetary policy, fiscal dynamics, external risks, and financial markets. We provide a forward-looking analysis with scenarios to guide investors and policymakers.
Table of Contents
Angola’s central bank cut its benchmark interest rate from 19.00% to 18.50% in November 2025, the first reduction since September 2025. This move follows a long period of elevated rates, with the policy rate stuck at 19.50% for over a year before a slight easing in September. The decision aligns with a gradual easing of inflationary pressures and a cautiously improving economic outlook.
Drivers this month
- Inflation slowed to 18.20% YoY in October, down from 19.00% in September.
- Oil prices stabilized around $85/barrel, supporting fiscal revenues.
- Currency pressures eased with the AOA appreciating 1.50% vs. USD over the past month.
Policy pulse
The 18.50% rate remains high relative to Angola’s 5% inflation target but signals a shift from tightening to cautious accommodation. The central bank aims to balance inflation control with supporting growth amid external uncertainties.
Market lens
Immediate reaction: The AOA strengthened 1.20% against the USD within the first hour post-announcement, while Angola’s 2-year government bond yields fell by 40 basis points, reflecting improved market sentiment.
Core macroeconomic indicators underpin the interest rate decision. Angola’s inflation rate has been on a downward trajectory since mid-2025, easing from a peak of 24.50% YoY in January to 18.20% in October. GDP growth is estimated at 3.10% YoY for Q3 2025, up from 2.40% in Q2, driven by oil sector recovery and modest diversification efforts.
Monetary Policy & Financial Conditions
The central bank’s monetary stance remains tight by global standards but is loosening domestically. Credit growth accelerated to 12% YoY in October, up from 9% in July, indicating improved liquidity. The banking sector’s non-performing loans ratio stabilized at 5.80%, supporting financial stability.
Fiscal Policy & Government Budget
Fiscal consolidation continues, with the government targeting a deficit of 3.50% of GDP in 2025, down from 4.20% in 2024. Oil revenues, accounting for 40% of government income, have benefited from stable prices, enabling increased infrastructure spending without jeopardizing debt sustainability.
Market lens
Immediate reaction: Angola’s sovereign bond spreads tightened by 30 basis points post-decision, while the AOA/USD pair rallied, reflecting market approval of the rate cut as a sign of stabilizing inflation and growth prospects.
This chart highlights a clear trend toward monetary easing after prolonged tightening. The interest rate cut signals confidence in inflation’s downward path and a willingness to support economic expansion. Market indicators confirm positive sentiment, suggesting a potential shift in Angola’s financial cycle.
Looking ahead, Angola’s monetary policy trajectory will depend on inflation dynamics, fiscal discipline, and external shocks. We outline three scenarios:
Bullish scenario (30% probability)
- Inflation falls below 12% by mid-2026.
- Further rate cuts to 15% by Q3 2026.
- Stronger currency and credit expansion support GDP growth above 4%.
Base scenario (50% probability)
- Inflation gradually declines to 15% by end-2026.
- Interest rates remain stable around 18%–18.50% through 2026.
- Moderate GDP growth of 3% sustained amid fiscal prudence.
Bearish scenario (20% probability)
- External shocks (oil price drop or geopolitical tensions) push inflation above 20%.
- Central bank forced to hike rates back above 20%.
- Currency depreciation and credit tightening slow growth below 2%.
Risks and Opportunities
Upside risks include stronger oil prices and improved fiscal management. Downside risks stem from global commodity volatility and regional geopolitical instability, which could disrupt capital flows and inflation control.
Angola’s interest rate cut to 18.50% marks a cautious but meaningful pivot in monetary policy. Supported by easing inflation and improved financial conditions, the move aims to balance growth and price stability. However, external vulnerabilities and fiscal discipline remain critical to sustaining this trajectory. Market reactions have been positive, reflecting confidence in the central bank’s calibrated approach.
Investors should monitor inflation trends, oil price developments, and fiscal policy signals closely. The interplay of these factors will shape Angola’s macroeconomic outlook and financial market performance in the coming quarters.
Key Markets Likely to React to Interest Rate Decision
Angola’s interest rate decision influences several key markets, including local currency, sovereign bonds, and regional equities. The following tradable symbols historically track Angola’s monetary policy shifts and macroeconomic conditions:
- AOAUSD – The Angolan kwanza’s exchange rate against the US dollar is directly impacted by interest rate changes and inflation expectations.
- BESA – Angola’s stock exchange index reflects investor sentiment tied to economic growth and monetary policy.
- SONANGOL – The state oil company’s stock price is sensitive to oil prices and fiscal policy, both linked to interest rate decisions.
- USDZAR – South African rand’s exchange rate often correlates with regional capital flows affecting Angola.
- BTCUSD – Bitcoin’s price can reflect shifts in risk appetite and capital movement in emerging markets like Angola.
Insight: Interest Rate vs. AOAUSD Since 2020
Since 2020, Angola’s interest rate changes have shown a strong inverse correlation with the AOAUSD exchange rate. Periods of rate hikes coincided with AOA depreciation, while easing phases, such as the current cut to 18.50%, have supported AOA appreciation. This dynamic underscores the central bank’s influence on currency stability amid inflationary pressures.
FAQ
- What is the significance of Angola’s latest interest rate cut?
- The cut to 18.50% signals a cautious easing of monetary policy, reflecting slowing inflation and improved economic conditions.
- How does the interest rate decision affect Angola’s currency?
- Lower rates tend to support currency appreciation by improving investor confidence and reducing inflationary pressures.
- What are the risks to Angola’s monetary outlook?
- Risks include volatile oil prices, geopolitical tensions, and fiscal slippages that could force a reversal to tighter policy.
Key takeaway: Angola’s interest rate cut marks a pivotal shift toward monetary easing, balancing inflation control with growth support amid external uncertainties.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
The interest rate cut to 18.50% in November 2025 compares to 19.00% in September 2025 and a 12-month average of 19.30%. This marks the first easing after nearly two years of steady or rising rates. Inflation’s YoY decline from 19.00% to 18.20% over the same period supports this policy shift.
Credit growth and currency appreciation trends further justify the easing. The AOA’s 1.50% gain against the USD contrasts with a 3% depreciation over the previous year, signaling improved external balances and investor confidence.