The Bank of Namibia (BoN) has reduced its Repo rate by 25 basis points to 6.50% following its Monetary Policy Committee (MPC) meeting held on 13 and 14 October 2025.
The Wednesday decision, which went against analysts’ expectations of an unchanged rate, aims to stimulate domestic economic activity while maintaining the one-to-one peg between the Namibia Dollar and the South African Rand.
Announcing the decision, BoN Governor Johannes !Gawaxab said the MPC took into account the weaker domestic growth outlook, contained inflation, and adequate foreign reserves before deciding to ease monetary policy.
Commercial banks are expected to adjust their prime lending rates downward by the same margin to 10.125%.
“To continue supporting the domestic economy while safeguarding the peg between the Namibia Dollar and the South African Rand, the MPC decided to reduce the Repo rate by 25 basis points to 6.50%,” !Gawaxab said.
He noted that economic activity has slowed significantly, with real GDP growth dropping to 1.6% year-on-year in the second quarter of 2025, down from 3.3% recorded in the same period in 2024.
The slowdown was mainly observed in the manufacturing, fishing, and agriculture sectors. The Bank projects overall economic growth for 2025 to decline from 3.7% recorded in 2024.
Inflation has remained subdued, averaging 3.6% in the first eight months of 2025 compared to 4.6% a year earlier, largely due to lower housing and transport costs. The Bank has revised its inflation forecasts downward to 3.6% for 2025 and 4.0% for 2026.
“This revision reflects a stronger exchange rate assumption and a downward revision to the oil price outlook. Risks to the forecast remain exchange rate volatility and potential upticks in administered and oil prices,” !Gawaxab said.
Private Sector Credit Extension (PSCE) showed modest improvement, rising to 5.8% in August 2025, driven mainly by business borrowing.
Meanwhile, Namibia’s merchandise trade deficit narrowed by 16.1% to N$17.9 billion in the first eight months of the year, supported by higher export earnings from uranium and gold.
The country’s international reserves stood at N$54.7 billion at the end of September 2025, providing 3.6 months of import cover — sufficient to sustain the currency peg and meet international obligations.
The next MPC meeting is scheduled for 1–2 December 2025.
