Namibian analysts say the country should brace for another interest rate hike this week as the Bank of Namibia (BoN) Monetary Policy Committee meets.
BoN will announce a decision on interest rates on Wednesday, 19 April 2023.
Simonis Storm Economist Theo Klein expects the central bank to hike the repo rate by 25bps on Wednesday and during the next announcement slated for 14 June 2023.
“We anticipate the central bank to hike the repo rate by 25 basis points on 19 April. This implies a repo rate of 7.5% by mid-2023. During the last Monetary Policy Committee (MPC) dialogue, the Bank of Namibia (BoN) Governor acknowledged that not all members agreed on a rate hike, but their views were outnumbered,” he said.
“Therefore, we expect that the bank will not take an overly aggressive approach. Nonetheless, local interest rate hikes will continue to be implemented until inflation shows signs of moving closer to 6%, as outlined in our previous reports.”
He does not expect the apex bank to blindly follow the South African Reserve Bank’s (SARB) Monetary Policy Committee decision last month to raise interest rates by 50 basis points (bps), contrary to market expectations.
According to Klein, this comes as the Bank of Namibia has previously deviated from South Africa’s repo rate in the past.
“The largest deviation between the two repo rates was 150bps between June 2008 and February 2009, but the longest period of deviation was during March 2010 to December 2013 (46 months in total),” he said.
PSG Namibia is, however, forecasting a 50-basis point hike come Wednesday.
“We expect the Bank of Namibia will raise the Namibian repo rate to 7.5% from 7.0% on April 19, following the South African Reserve Bank’s (Sarb) decision to raise its repo rate by 50 bps in March. Thereafter, we expect the Namibian repo rate to be kept stable during the remainder of 2023 as the inflation rates in Namibia and South Africa are anticipated to remain elevated compared with the midpoint of the inflation target (4.5%).”
