The Monetary Policy Committee (MPC) of Angola’s central bank lifted the benchmark interest rate by 50bp to 10.25% in yet another effort to curb inflation and stop a sharp depreciation of the local kwanza currency. The MPC, which holds regular monthly meetings, has raised the key rate by a total of 125bp so far this year, triggered by rising inflation and a weakening kwanza.

Angola’s annual consumer price inflation accelerated for the fifth straight month in June, peaking at 9.61%, up from 8.86% in May. The monthly inflation rate quickened to 1.25% last month from 1.21% in May, and was by 0.68pp above its June 2014 level.

The average exchange rate of the kwanza against the US dollar plunged by 10.04% m/m to AOA121.965 per $1 in June, following a 0.91% depreciation in May.

Credit to the economy expanded by 5.56% in the first half of the year. It stood at AOA3.428trn at end-2014.

Angola’s GDP growth and macroeconomic stability were undermined by the lower oil prices, as oil-related revenues accounted for 70% of total fiscal receipts in 2014 and an estimated 95% of exports.

Angola’s government targets to maintain the country’s economic growth rate at 6.6% this year, keep inflation within a 7%-9% target range and maintain the level of gross international reserves at about six months of imports. According to the IMF’s latest forecast, Angola’s average annual inflation will accelerate to 8.4% this year from 7.3% in 2014.

The next meeting of the MPC is scheduled for August 28.