Bank of Namibia raises repo rate by 25 basis points to 6.75%

The Bank of Namibia’s Monetary Policy Committee raised the repo rate by 25 basis points to 6.75%, saying a moderate tightening was needed to address rising global and domestic inflationary pressures, support international reserves and preserve the one-to-one link between the Namibia Dollar and the South African Rand despite weak economic activity and sluggish private-sector credit. The move also lifts the prime lending rate, and the central bank said the stance was aimed at limiting second-round effects from the energy shock. Domestic activity remained weak in the first four months of 2026, although growth is projected to recover to 2.6% in 2026, while headline inflation accelerated to 4.1% in May and private-sector credit growth remained subdued. On the external side, the merchandise trade deficit widened and international reserves increased to N$55.4 billion, equal to 3.5 months of import cover, which the central bank said was sufficient to support the peg and meet international obligations. Globally, the central bank highlighted elevated uncertainty, higher inflation across monitored economies, tighter policy by some key central banks, and oil prices that, although eased by signs of reduced Middle East tensions, could still keep domestic inflation under pressure. The Bank of Namibia said it will closely monitor inflation expectations and capital flows and react as needed to contain second-round effects and safeguard the currency peg.