The Bank of Namibia (BoN) is expected to keep the repo rate unchanged at 7.75% when it announces its Monetary Policy decision on Wednesday.
“Given the Namibian governor’s concerns around the low level of private sector credit extension domestically, as well as a healthy reserve position, we expect the Bank of Namibia to keep rates at 7.75% and maintain the differential of 50 bps with the South African Reserve Bank until the cutting cycle begins,” FNB Namibia Economist Helena Mboti told The Brief.
“Upside risks to this view are higher interest rates in South Africa due to global inflationary pressures, a weak exchange rate, as well as increased energy and food prices. However, the South African Reserve Bank (SARB) has kept rates unchanged at 8.25% at the last meeting in November. They have further indicated they expect the cutting cycle to begin in May 2024,”
Simonis Storm Economic Researcher Halleluyah Ndimulunde also expects the repo rate to remain unchanged.
“The Bank of Namibia will have its last MPC meeting for the year on Wednesday (6th December 2023), and we anticipate that the repo rate will be held steady at 7.75%, with the prime rate also remaining unchanged at 11.5%. This expectation is in line with the decision of the South African Reserve Bank (SARB) to keep the repo rate at 8.25% during its latest MPC meeting,” she said.
Ndimulunde said “while this may not significantly ease the financial burden for businesses and households, it provides stability in the financial landscape, avoiding further tightening.”
The central bank last hiked the repo rate by 50 bps to 7.75% in June 2023, which signified an increase of 400 bps in 18 months.