The Bank of Namibia’s (BoN) Monetary Policy Committee cut the country’s interest rates by 25 basis points citing declining inflation and that the economy needed more support.
This marks the second time since August 2024 that the committee has changed rates, and it is in line with economists’ and analysts’ expectations.
The repo rate is now sitting at 7.25% and the prime lending rate has been cut to 11%.
The move, according to BoN Governor Johannes !Gawaxab, aims to support the domestic economy while maintaining the peg between the Namibia Dollar and the South African Rand.
“In deciding on this policy stance, the committee was wary of the renewed widening of the policy rate differential with the anchor country, South Africa, but was comforted by Namibia’s recent experience of orderly capital flows along with adequate levels of international reserves,” he said on Wednesday.
“In discussing the monetary policy stance, the MPC noted the growing momentum in the international monetary policy easing cycle, the retreat in domestic inflation over the medium term, along with the recent downside surprise in the September 2024 inflation print. The MPC also noted that the domestic economy, while growing at a moderate pace, was operating below full capacity, with private sector credit extension remaining subdued. This suggested that further support to the domestic economy is warranted.”
The decision follows the MPC’s fifth bi-monthly meeting of 2024, held on the 14th and 15th of October, where members deliberated on the appropriate monetary policy stance for the coming two months.
The next MPC meeting will be held on 2 and 3 December 2024.
