- Decision
- Raise
- Rate change
- 25 bps
- repo rate
- 7%
The Bank of Namibia’s Monetary Policy Committee (MPC) unanimously raised the repo rate by 25 basis points to 7.00% for the next two months to safeguard the Namibia Dollar’s peg to the South African Rand and limit second-round effects from high fuel prices, despite subdued domestic activity. The move followed a 25-basis-point increase to 6.75% in June 2026 and an August hold. Annual inflation accelerated to 5.4% in September, primarily reflecting higher transport inflation, while the central bank raised its inflation forecasts on assumptions of a prolonged energy price shock. Economic growth is projected at 2.1% in 2026, supported by recoveries in agriculture and manufacturing but constrained by risks including the Foot and Mouth Disease outbreak. Private-sector credit growth picked up, reflecting increased borrowing by businesses and households. International reserves rose and remained sufficient to support the currency peg and meet international financial obligations. Globally, Middle East tensions drove oil prices higher, intensifying inflation and prompting tighter monetary policy across key economies. The MPC also stressed the need to narrow the interest-rate gap with South Africa to stem potential capital outflows and safeguard reserves.
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 to safeguard the peg with the South African Rand while supporting growth, then paused at the lower level. 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. At its meeting on 26 and 27 October 2026, the Committee raised the Repo rate by a further 25 basis points to 7.00 percent to safeguard the peg, mitigate second-round effects of high fuel prices and narrow the interest rate gap with South Africa to stem potential capital outflows and protect reserves, amid persistent inflation pressures.