- Decision
- Maintain
- Rate change
- 0 bps
- repo rate
- 6.75%
The Monetary Policy Committee of the Bank of Namibia left the repo rate unchanged at 6.75 percent for the coming two-month period, judging this level sufficient to protect the Namibia dollar’s one-to-one peg to the South African rand while sustaining domestic demand amid subdued inflation and moderating, though still positive, growth prospects. After a 25 bp cut in February 2025, the committee has kept the policy rate steady at 6.75 percent in its April, June and now August reviews. Commercial banks are to maintain prime lending rates at 10.50 percent and, following a June guidance note, reduce the prime–repo spread by 12.5 bp by end-September, leaving Namibia’s policy rate 25 bp below South Africa’s after the SARB’s July cut. Consumer price inflation averaged 3.6 percent in the first seven months of 2025, with July at 3.5 percent, and is projected to average 3.8 percent in 2025 and 4.2 percent in 2026 against a 3–6 percent target; real GDP growth is seen at 3.5 percent this year and 3.9 percent in 2026 after a slower first-half expansion and downward revisions linked to weaker primary industries. PSCE growth quickened to 5.7 percent in June, the trade deficit narrowed by 28.2 percent to NAD 12.8 bn in H1 as uranium and gold exports rose, and reserves edged up to NAD 58.1 bn (3.8 months of import cover), deemed adequate for the peg. Externally, global growth remains resilient and inflation generally contained, commodity price moves are mixed, and most monitored central banks have held or cut rates, including South Africa. The committee said its stance balances domestic support with exchange-rate stability and noted forthcoming prime-rate normalisation to bolster credit growth.
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.