Central Bank hikes interest rates again

The Bank of Namibia (BoN) announced a second consecutive 25 basis points increase in the repo rate for the year to 7.25%. The prime lending rate for local commercial banks no stands at 11%.According to the Namibia Statistics Agency (NSA), inflation came in at 7.2% in March 2023 and averaged 7.1% in the first quarter of 2023. The real policy rate (repo rate- inflation) is positive at 0.05 (7.25-7.2%). The governor of the Bank of Namibia Johannes !Gawaxab said the decision to increase the repo rate was taken to contain inflationary pressures, stem their second-round effects and anchor inflation expectations. The decision was further deemed appropriate to safeguard the one-to-one link between the Namibia Dollar and the South African Rand. The central bank projects inflation to average 6.1% this year, from a forecast of 5.3% at the previous monetary policy announcement in February.Meanwhile, the South African Reserve Bank (SARB) at the second monetary policy announcement for the year increased the repo rate by 50 basis from 7.25% to 7.75%, hiking the prime lending rate from 10.75% to 11.25%. The interest rate margin (repo rate-prime lending rate) in South Africa is 3.5% and 3.75% locally. The South African Reserve Bank’s monetary policy committee prefers to anchor inflation expectations close to the 4.5% midpoint of its target range of 3%-6%.According to Stats SA, headline consumer inflation edged higher to 7.1% in March from 7.0% in February and 6.9% in January.The next monetary policy announcement by the South African Reserve Bank is expected to take place on 25 May, while the third monetary policy announcement for the year by the Bank of Namibia is expected to take place on 13 June.-phillep@nmh.com.na

Central Bank hikes interest rates again

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Namibian Sun 2025-06-25

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Central Bank hikes interest rates again

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Namibian Sun 2025-06-25

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