The Bank of Namibia (BoN) is expected to hold its repo rate at 6.75% when it meets on 18 June, as analysts cite contained but persistent inflation, moderate credit activity and continued external uncertainty.
FNB Namibia Economist Helena Mboti said the BoN is likely to maintain a cautious stance despite a recent drop in headline inflation.
This comes as April’s inflation stood at 3.6%, down from 4.2% in March, largely due to lower fuel costs.
However, Mboti noted that core inflation remained above headline at 4.0%, reflecting deeper price pressures that limit the space for immediate rate adjustments.
“We expect the Bank of Namibia (BoN) to keep the repo rate unchanged at 6.75% on 18 June 2025 amid sticky core inflation, subdued credit growth, and global uncertainty,” she said.
Mboti added that private sector credit growth continues to show weakness.
In April, credit extension slowed to 4.5% year-on-year, with household lending relatively flat at 2.7%.
She said this indicates limited consumer demand despite stable liquidity and positive economic growth, which FNB now forecasts at 3.0% for 2025, down from an earlier projection of 3.5%.
Simonis Storm Junior Economist Almandro Jansen said BoN will likely delay any rate cuts until there is more clarity on inflation and external balances.
He pointed to potential volatility in global capital flows and exchange rates as key risks that justify a data-driven approach.
Jansen added that while regional developments may suggest room to ease, Namibia’s monetary policy must remain aligned with broader macroeconomic stability goals.
“With inflation easing to 3.6% in April, the central bank has a little more breathing room, but not quite enough to act. The risks particularly from global trade uncertainty, external financing conditions, and exchange rate volatility still warrant a measured,” he said
The South African Reserve Bank (SARB) cut its repo rate by 25 basis points to 7.25% in May, narrowing the interest rate differential with Namibia to 50 basis points.
This marked the SARB’s first rate cut of the year and was supported by slowing inflation and weak domestic growth.
However, Jansen said Namibia is unlikely to mirror the move immediately due to its smaller policy buffer and the need to protect the currency peg.
According to High Economic Intelligence (HEI), Namibia’s international reserves rose to N$63.6 billion in April, providing just over four months of import cover.
HEI said this level supports the current monetary policy stance, but cautioned that slow mortgage uptake and weak household demand limit the short-term impact of lower interest rates.
“The market sentiment is that the Bank of Namibia could decrease the repo rate by 25 basis points, to 6.5%, or hold rates steady to help stimulate credit levels and economic growth,” the firm noted
Looking ahead, analysts expect the BoN to remain cautious for the rest of the year, with the possibility of a rate cut later in 2025 if inflation continues to trend lower and currency conditions remain stable.
