BoN rate cut expected
The year-to-date average inflation stood at 6.8% compared to 6.4% during the same period last year.
While the highest inflation rate was recorded in January 2017, the Namibia Statistics Agency is of the opinion that prices have been softening for much of the year depicting a downward spiral.
The 2017 calendar year was characterised by a continuous downward trend on the annual inflation rate recording its highest rate of 8.2% in January 2017 and hitting a low of 5.4% in July 2017.
The 5.4% annual inflation rate is the lowest recorded since February 2016, according to the Namibia Statistics Agency.
“The slowdown in the July 2017 annual inflation rate emanated mainly from price levels of food and non-alcoholic beverages, which dropped from 12.2% recorded in July a year earlier to 4.3% obtained in July 2017, alcoholic beverages and tobacco slowed from 6.6% in July 2016 to 3.6% in July 2017,” according to the NSA.
Furnishing, household equipment and routine maintenance of the house fell from 5.7% percent in July of the previous year to 4.1% recorded in July 2017.
The recreation and culture annual inflation rate fell to 4.9% in July 2017 from 5.3% registered in July 2016.
On a monthly basis, the inflation rate slowed down to 0.04% compared to 0.1% registered during the previous month.
Equity analyst at PSG Konsult Eloise du Plessis believes an interest rate cut is now possible, taking into consideration signs of continued economic weakness.
“In light of the current recession, signs of continued economic weakness, the moderation in inflation and the resilience of the Namibian dollar, we now expect the Bank of Namibia will cut interest rates by 25 bps in the second half of 2017, possibly as soon as next month,” said Du Plessis.
The repo rate announcement is expected to be made next week after a meeting of the Bank of Namibia's monetary policy committee.
Du Plessis also believes that a cut in the repo rate would be spurred on by a similar move adopted by the South African Reserve Bank to cut its repo rate by 25 basis points.
“The surprise decision last month by the SARB to cut interest rates by 25 basis points also increases the likelihood of a Namibian interest rate cut this year.
Although South Africa and Namibia's policy rates are not formally linked, the BoN tracks the SARB closely,” Du Plessis said.
OGONE TLHAGE
The 2017 calendar year was characterised by a continuous downward trend on the annual inflation rate recording its highest rate of 8.2% in January 2017 and hitting a low of 5.4% in July 2017.
The 5.4% annual inflation rate is the lowest recorded since February 2016, according to the Namibia Statistics Agency.
“The slowdown in the July 2017 annual inflation rate emanated mainly from price levels of food and non-alcoholic beverages, which dropped from 12.2% recorded in July a year earlier to 4.3% obtained in July 2017, alcoholic beverages and tobacco slowed from 6.6% in July 2016 to 3.6% in July 2017,” according to the NSA.
Furnishing, household equipment and routine maintenance of the house fell from 5.7% percent in July of the previous year to 4.1% recorded in July 2017.
The recreation and culture annual inflation rate fell to 4.9% in July 2017 from 5.3% registered in July 2016.
On a monthly basis, the inflation rate slowed down to 0.04% compared to 0.1% registered during the previous month.
Equity analyst at PSG Konsult Eloise du Plessis believes an interest rate cut is now possible, taking into consideration signs of continued economic weakness.
“In light of the current recession, signs of continued economic weakness, the moderation in inflation and the resilience of the Namibian dollar, we now expect the Bank of Namibia will cut interest rates by 25 bps in the second half of 2017, possibly as soon as next month,” said Du Plessis.
The repo rate announcement is expected to be made next week after a meeting of the Bank of Namibia's monetary policy committee.
Du Plessis also believes that a cut in the repo rate would be spurred on by a similar move adopted by the South African Reserve Bank to cut its repo rate by 25 basis points.
“The surprise decision last month by the SARB to cut interest rates by 25 basis points also increases the likelihood of a Namibian interest rate cut this year.
Although South Africa and Namibia's policy rates are not formally linked, the BoN tracks the SARB closely,” Du Plessis said.
OGONE TLHAGE
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