- Decision
- Maintain
- Rate change
- 0 bps
- repo rate
- 6.5%
The Monetary Policy Committee of the Bank of Namibia kept the repo rate unchanged at 6.50 percent for the next two months, citing the need to safeguard the Namibia dollar–South African rand peg while balancing an expected upturn in inflation against subdued domestic growth and credit demand. The rate has remained at this level since a 25 bp cut in October 2025. Commercial banks are to maintain prime lending rates at 10.00 percent. Inflation averaged 2.5 percent in the first quarter and slipped to 2.1 percent in March, but is forecast to climb to 3.7 percent in 2026 before easing to 3.4 percent in 2027; GDP growth slowed to 1.7 percent in 2025 and is projected to recover to 2.6 percent this year, while private-sector credit growth inched up to 4.7 percent y/y in February yet remains tepid. Externally, the merchandise trade deficit widened 9.5 percent y/y to about NAD 9 billion in the first quarter and the currency has depreciated, though international reserves held steady at NAD 51.8 billion (3.2 months of import cover), deemed adequate for the peg. The committee highlighted persistent global uncertainty, a sharp rise in energy prices linked to Middle East tensions, and the IMF’s downgrade of 2026 world growth to 3.1 percent alongside a higher global inflation outlook of 4.4 percent, and said it would maintain a cautious policy stance amid elevated external and inflation risks.
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.