3 days ago
Namibia central bank holds interest rates steady to support economy, rand peg
Namibia's central bank left its main interest rate unchanged for a third straight policy meeting on Wednesday, and said it wanted to safeguard the peg between the local currency and the South African rand while supporting the domestic economy.
Neighbouring South Africa, whose economy is closely interlinked with Namibia's, reduced its rate by 25 basis points last month.
"Maintaining the repo rate unchanged, while the anchor country's repo rate was reduced in July, was a further step towards narrowing the interest differential between Namibia and South Africa," said Bank of Namibia Governor Johannes !Gawaxab.
!Gawaxab said Namibia's rate, now 25 basis points lower than South Africa's, struck a balance between fostering local economic growth and sustaining stable capital flows.
The bank lowered inflation forecasts for 2025 and 2026 by 0.1 percentage points on Wednesday to 3.8% and 4.2% respectively, to reflect lower crude oil price assumptions.
Inflation in the southern African country stood at 3.5% in July.
The central bank lowered its economic growth forecasts for this year and the next on Monday, citing a challenging environment for the agriculture, mining and manufacturing sectors.
It expects GDP growth of 3.5% in 2025, down from 3.8% projected in June, and 3.9% in 2026, lower than the 4.0% previously forecast.
(Reporting by Nyasha Nyaungwa; Writing by Sfundo Parakozov; Editing by Alexander Winning and Rachna Uppal)
