- Decision
- Raise
- Rate change
- 25 bps
- repo rate
- 6.75%
The Monetary Policy Committee of the Bank of Namibia raised the repo rate by 25 basis points to 6.75% in June 2026, saying a moderate tightening was appropriate to mitigate inflationary risks, support international reserves and safeguard the one-to-one link between the Namibia Dollar and the South African Rand amid rising global and domestic price pressures and subdued domestic activity. The move lifts the prime lending rate to 10.25%. Domestically, economic activity remained weak in the first four months of 2026, while growth is projected to recover to 2.6% in 2026 from 1.7% in 2025; headline inflation accelerated to 4.1% in May from 2.1% in March and is now forecast at 4.0% in 2026 before easing to 3.6% in 2027, with risks tilted to the upside, while private sector credit extension growth remained subdued at 4.8% year on year in April. On the external side, the merchandise trade deficit widened to N$11.7 billion in the first four months of 2026, but international reserves increased to N$55.4 billion at end-May, equivalent to 3.5 months of import cover, which the central bank said was sufficient to support the peg and meet international financial obligations. The MPC cited elevated global uncertainty, mixed growth, higher inflation across monitored economies, tighter policy by some key central banks and oil prices that, despite retreating to about USD79 a barrel, could remain above pre-war levels and keep pressure on domestic inflation. The Bank of Namibia said it will closely monitor inflation expectations and capital flows and react appropriately to contain second-round effects and protect the currency peg.
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.