- Decision
- Maintain
- Rate change
- 0 bps
- repo rate
- 6.5%
The Monetary Policy Committee (MPC) of the Bank of Namibia kept the repo rate at 6.50 percent at its 1–2 December 2025 meeting, saying the current setting continues to balance the need to protect the Namibia dollar’s one-to-one peg to the South African rand with support for a moderating domestic economy and contained inflation. After two 25-bp cuts in February and October, the repo rate now stands 50 bp lower than at the start of 2025. Commercial banks are to hold prime lending rates at 10.125 percent, and the MPC expects further normalisation of the prime-repo spread—potentially lowering prime to 10.00 percent—by year-end. Inflation averaged 3.6 percent in the first ten months of 2025 and is projected at 3.6 percent for 2025 and 3.8 percent for 2026, while real GDP growth is forecast to slow from 3.7 percent in 2024 to 3.0 percent in 2025 before recovering to 3.8 percent in 2026; private-sector credit growth eased to 4.7 percent in October from 5.8 percent in August. The merchandise trade deficit narrowed 14.5 percent to NAD 25.8 billion in the January–October period, and international reserves, although lower at NAD 48.6 billion (3.2 months of import cover) after Eurobond redemptions, are deemed adequate. Globally, growth and inflation have moderated, commodity price moves are mixed, and several major central banks—including the South African Reserve Bank—have trimmed rates. Citing ongoing global policy uncertainty and South Africa’s formal shift to a 3 percent inflation target, the MPC pledged continued vigilance, with the next policy meeting set for 16–17 February 2026.
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.