75 bps interest rate hike expected
Local analysts expect the Bank of Namibia to hike the repo rate by 75 basis points (bps) tomorrow. The expected increase will move the repo rate for 5.50% to 6.25%, while the prime lending rate will jump from 9.25% to 10%.
The South African Reserve Bank (SARB) recently announced a 75 basis points increase in the repo rate from 5.50% to 6.25%. The prime lending rate in South Africa currently stands at 9.75%.
“We expect the Bank of Namibia to reciprocate to any decisions taken by the SARB,” IJG Securities said.
According to Simonis Storm, the South African Reserve Bank (SARB) and Bank of Namibia (BoN) have hiked their respective repo rates by 250bps and 175bps year to date, with the bulk of South Africa’s hikes being announced in in the third quarter of 2022.
The interest rate spread in Namibia is 3.75%, while South Africa’s is slightly lower at 3.5%. Interest rate spread is the difference between the repo rate and prime lending rate.
The SARB only has one monetary policy announcement left, while BoN has two left.
“We see the repo rates between South Africa and Namibia equalized at 7.00% by the end of this year, with the prime rate at 10.50% in South Africa and 10.75% in Namibia,” Simonis Storm said.
According to the Namibia Statistics Agency (NSA), inflation stood at 7.1% in September.
“The risk of continuing with an aggressive rate hiking cycle in South Africa – and Namibia by implication – is that monetary policy becomes restrictive for an economy not experiencing demand-pull inflationary pressures and having numerous domestic economic growth challenges. This implies that the rate hiking cycle in South Africa – and Namibia – could come to an end by early 2023, especially if domestic growth concerns influence rate decisions more than global interest rate differentials,” Simonis Storm [email protected]
The South African Reserve Bank (SARB) recently announced a 75 basis points increase in the repo rate from 5.50% to 6.25%. The prime lending rate in South Africa currently stands at 9.75%.
“We expect the Bank of Namibia to reciprocate to any decisions taken by the SARB,” IJG Securities said.
According to Simonis Storm, the South African Reserve Bank (SARB) and Bank of Namibia (BoN) have hiked their respective repo rates by 250bps and 175bps year to date, with the bulk of South Africa’s hikes being announced in in the third quarter of 2022.
The interest rate spread in Namibia is 3.75%, while South Africa’s is slightly lower at 3.5%. Interest rate spread is the difference between the repo rate and prime lending rate.
The SARB only has one monetary policy announcement left, while BoN has two left.
“We see the repo rates between South Africa and Namibia equalized at 7.00% by the end of this year, with the prime rate at 10.50% in South Africa and 10.75% in Namibia,” Simonis Storm said.
According to the Namibia Statistics Agency (NSA), inflation stood at 7.1% in September.
“The risk of continuing with an aggressive rate hiking cycle in South Africa – and Namibia by implication – is that monetary policy becomes restrictive for an economy not experiencing demand-pull inflationary pressures and having numerous domestic economic growth challenges. This implies that the rate hiking cycle in South Africa – and Namibia – could come to an end by early 2023, especially if domestic growth concerns influence rate decisions more than global interest rate differentials,” Simonis Storm [email protected]
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