Further policy tightening likely in Angola

It was a thin week for data releases in the rest of Sub-Saharan Africa with the most noticeable events being Angola's MPC meeting and Zambia's inflation print. The Bank of Angola's MPC hiked its base rate 50bp in line with our expectations, bringing the cumulative rate to 150bp in the current cycle. 

"Given the FX risks and steady rise in inflation, the bias remains for further policy tightening in the remainder of the year", says Barclays. 

The further policy tightening comes against a backdrop of rising inflation and persistent FX depreciation. Headline inflation rose to 9.6% y/y in June,above the 6-9% target, and further increases are likely. At the same time, the kwanza has depreciated 18% year-to-date as the effect of low oil prices continues to reverberate through the economy. 

In Zambia, headline inflation in June was unchanged at 7.1% y/y from the previous month. 

"The weaker currency is expected to remain a key risk, though our projections indicate an inflation rate of close to 7% until year-end", added Barclays.