Namibia central bank holds repo rate to safeguard rand peg
WINDHOEK - Namibia's central bank left its main interest rate unchanged on Wednesday, saying it wanted to safeguard the local currency's peg to South Africa's rand and that global risks were limiting its ability to ease policy.
It was the second meeting in a row where the bank has kept its repo rate at 6.75% after four rate cuts before that.
Global central banks
are trying to prop up their economies through rate cuts in the face of risks linked to U.S. President Donald Trump's trade war and global conflicts.
"The MPC (Monetary Policy Committee) was wary of the prevailing uncertainty from fundamental global economic and trade policy shifts," the Bank of Namibia said in a statement.
"The escalating Middle East conflict and its potential ramifications for global inflation and growth could not be overlooked."
The central banks of Namibia and neighbouring South Africa often move in lockstep given the 1:1 peg between the Namibian dollar and the rand.
But after South Africa
cut
rates by 25 basis points to 7.25% last month Namibia said on Wednesday that it wanted to reduce the interest rate differential between the two countries in the interest of orderly capital flows.
Namibia's international reserves are sufficient to cover about 3.7 months of imports, the central bank said.
It expects real economic growth to marginally improve to 3.8% in 2025 and 4.0% in 2026, from an estimated 3.7% last year.
The bank lowered its inflation projections for 2025 and 2026 to 3.9% and 4.3% respectively, reflecting a smaller-than-anticipated rise in administered prices and a stronger exchange rate. Inflation stood at 3.5% in May versus 3.6% in April.
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