The Monetary Policy Committee (MPC) of the Bank of Namibia (BoN) at its first meeting for the year resolved to hike the repo rate by25 basis points, inline with analyst forecasts.
According BoN Governor, Johannes !Gawaxab, two members of the MPC recommended that the rate remain unchanged, with the other opting for a 25bps hike, while none recommended a 50bps hike.
“The MPC decided to increase the Repo rate by 25 basis points to 7%. The increase in the Repo rate effectively brings the prime lending rate to 10.75%. The decision was taken to contain inflationary pressure and its second-round effects and anchor inflation expectations. The decision is also deemed appropriate to safeguard the one-to-one link between the Namibia Dollar and the South African Rand. Moreover, this monetary policy stance will take the current negative real policy interest rate to a neutral rate,” he said.
The Governor noted that the Bank will continue to monitor these developments and their potential effects on the domestic economy and will act appropriately, in line with its mandate to ensure price stability in the interest of sustainable economic growth and development of the country.
Cirrus Capital Securities and Simonis Storm had forecasted a 25bps hike, while PSG Namibia forecasted a 50bps hike.
“We maintain our view that the interest rate hiking cycle could have come to an end in Namibia. Further, we see interest rates remaining at current levels at least until end of 2024,” Simonis Storm Economist, Theo Klein said.
This comes after the SARB Monetary Policy Committee last month voted to hike interest rates by 25bps, taking the country’s repurchase rate to 7.25%, increasing the prime lending rate to 10.75%.
The next meeting of the MPC will be held on the 17th and 18th of April 2023.
