- Decision
- Lower
- Rate change
- 25 bps
- repo rate
- 6.5%
The Bank of Namibia’s Monetary Policy Committee cut the repo rate by 25 bp to 6.50 % at its 13–14 October meeting, arguing that a sharper-than-expected slowdown in GDP growth to 1.6 % y/y in Q2 and well-contained inflation—averaging 3.6 % in January–August and unchanged at 3.5 % in September with forecasts trimmed to 3.6 % for 2025 and 4.0 % for 2026—justify additional support to demand while foreign-reserve adequacy and a still-high real policy rate safeguard the Namibia dollar–rand peg. After a 25 bp cut in February and three meetings on hold, the policy rate now stands 50 bp below its December 2024 level. Commercial banks are expected to lower prime lending rates by the same 25 bp to 10.125 %. Private-sector credit growth picked up to a post-pandemic high of 5.8 % y/y in August, the trade deficit narrowed 16.1 % to NAD 17.9 bn in the first eight months, and reserves slipped to NAD 54.7 bn (3.6 months of import cover) but remain sufficient for the peg. Globally, growth is holding up though the IMF sees a slight moderation ahead, commodity prices—especially gold—have firmed while oil has softened, and most major central banks stayed on hold except the US Federal Reserve, which delivered its first cut of 2025. The committee judged that the resulting interest-rate gap with South Africa remains tolerable and said the easier stance will keep bolstering domestic activity without compromising the currency link.
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.