- Decision
- Lower
- Rate change
- 25 bps
- repo rate
- 6.75%
The Bank of Namibia’s Monetary Policy Committee cut the repo rate by 25 bp to 6.75 percent to bolster domestic activity while preserving the one-to-one Namibia dollar/South African rand peg, citing a recent slowdown in inflation and still-subdued credit growth against an adequate reserve buffer. Commercial banks are expected to pass the cut through by lowering their prime rate to 10.50 percent. Average inflation eased to 4.2 percent in 2024 from 5.9 percent in 2023, though it edged up to 3.2 percent in January 2025; the central bank projects 4.0 percent for 2025 and 4.4 percent for 2026. Real GDP growth is seen decelerating to 3.5 percent in 2024 from 4.2 percent in 2023 before rebounding to 4.0 percent in 2025, with risks stemming from trade tensions, geopolitical uncertainty, adverse weather and infrastructure delays. Private-sector credit extension picked up to 4.0 percent y/y in December but averaged only 2.5 percent in 2024. The 2024 merchandise trade deficit widened to NAD 42 bn and the exchange rate has moderately depreciated, yet international reserves rose to about NAD 65 bn at end-January, covering 4.3 months of imports and deemed sufficient to support the peg. Globally, growth remains modest, commodity prices mixed and inflation has firmed in many economies even as most monitored central banks pursue gradual easing. The committee noted the need to narrow its policy gap with South Africa and will maintain a cautious approach that balances economic support with external stability.
Rate evolution
From June 2025 to April 2026, the Bank of Namibia eased the Repo rate by 25 basis points to 6.50 percent after holding it at 6.75 percent through mid-2025, then paused at the lower level. Early holds were aimed at safeguarding the peg with the South African Rand while supporting slower growth, with inflation subdued, reserves adequate and credit weak, amid downside risks from trade policy shifts, weak diamond prices, geopolitical tensions and supply constraints. The October cut reflected weaker activity and lower inflation, and the view that a high real Repo rate, adequate reserves and orderly flows gave room to support growth despite concern about a wider rate gap with South Africa.
The Monetary Policy Committee then kept the Repo rate at 6.50 percent through April 2026, arguing that weak activity and credit warranted support but that peg management, South Africa’s lower inflation target and the Middle East-driven energy shock required vigilance as inflation was projected to rise in 2026 before moderating. On 17 June 2026, the Bank of Namibia raised the Repo rate by 25 basis points to 6.75 percent, citing rising global and domestic inflationary pressures, an upward revision to the inflation outlook and the need to mitigate second-round effects of the energy shock, support international reserves and safeguard the one-to-one link between the Namibia Dollar and the South African Rand, even as domestic activity remained weak and private sector credit extension subdued. On 12 August 2026, it held the Repo rate at 6.75 percent, balancing subdued economic activity, a relatively benign inflation outlook and sufficient foreign exchange reserves against elevated inflationary pressures and the need to close the interest rate gap with the anchor country to stem capital outflows.