- Decision
- Maintain
- Rate change
- 0 bps
- repo rate
- 6.75%
The Bank of Namibia’s Monetary Policy Committee kept the repo rate unchanged at 6.75 percent for the coming two-month period, judging that steady policy is needed to safeguard the Namibia dollar’s one-to-one peg to the South African rand while supporting activity in an environment of heightened global policy uncertainty and a mildly firming inflation outlook. The pause follows February’s 25 bp cut that brought the rate to its present level. Commercial banks are expected to maintain prime lending rates at 10.50 percent, and although high real rates, adequate reserves and sluggish credit growth could have argued for more easing, the committee cited the need to avoid an excessive interest-rate gap with South Africa and to preserve external stability. Inflation averaged 3.7 percent in Q1 but picked up to 4.2 percent in March; the Bank now sees inflation averaging 4.2 percent in 2025 and 4.5 percent in 2026, while GDP grew 3.7 percent in 2024 and is projected at 3.5–4.0 percent this year amid ongoing strength in mining, tourism, trade, communication and transport. Private-sector credit growth was little changed at 3.9 percent year on year in February, the merchandise trade deficit narrowed to NAD 4.6 billion in the first two months of 2025, and reserves dipped to NAD 59.7 billion (3.9 months of import cover) as the Namibia dollar weakened further in early April. The MPC underscored the drag from global trade tensions, volatile commodity prices and mixed international inflation trends, and indicated it will continue balancing inflation prospects, reserve adequacy and peg stability in future deliberations.
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.