Central bank maintains repo rate

The Monetary Policy Committee (MPC) of the Bank of Namibia (BoN) this week unanimously elected to leave the repo rate unchanged at 6.5%.The BoN said the move was driven by the need to safeguard the one-to-one link between the Namibia Dollar and the South African Rand while remaining supportive of domestic economic activity. Commercial banks are accordingly expected to keep their prime lending rates at 10%, BoN governor Ebson Uanguta said of the MPC's decision.In determining the appropriate monetary policy stance, the MPC noted the sustained appreciation of the exchange rate, which has assisted to rein in inflation. The MPC further considered the weaker domestic economic activity and private sector credit extension, as well as benign inflation projections, Uanguta explained.“Domestic inflation remains well contained. In this regard, average inflation fell to a post-pandemic low of 3.5% in 2025 from 4.2% in 2024, slightly undershooting our prior forecast of 3.6%. The slower inflation outcome was primarily ascribed to disinflationary pressures in transport, housing and alcoholic beverages,” Uanguta said.“The most recent inflation print indicates a further deceleration to 2.9% in January 2026 from 3.6% in October 2025 recorded at the previous MPC meeting. This deceleration was aided primarily by a notable slowdown in food inflation,” he added. Looking ahead, the BoN said inflation is projected to remain steady at 3.5% in 2026 before moderating to 3.4% in 2027. “The 2026 forecast has been revised downward by 0.3 percentage point, on assumptions of lower oil and food prices alongside a stronger currency. Nevertheless, upside risks remain, including potential increases in administered prices, exchange rate volatility and geopolitical tensions,” Uanguta said.“However, weighing these against the imperative to ensure orderly capital flows in the interest of safeguarding the currency peg arrangement, the MPC decided to keep the repo rate unchanged at its current level,” he added.Efforts to ease the cost of borrowing further influenced the MPC’s stance, Uanguta said.“Furthermore, the supportive effects of prior monetary policy easing, together with the prime-repo rate differential normalisation achieved since December 2025, are considered sufficient to continue providing support to the domestic economy.”

Central bank maintains repo rate

Comments

Namibian Sun 2026-02-20

Please login to leave a comment

Central bank maintains repo rate

Comments

Namibian Sun 2026-02-20

Please login to leave a comment

Subscription Required to Access Content ×

Login

Subscription Required to Access Content