First National Bank of Namibia (FNB) Economist Helena Mboti says the Bank of Namibia (BoN) is likely to implement another 25-basis-point interest rate cut in December, following its recent decision to lower the repo rate to 6.50% in October.
Mboti noted that if the South African Reserve Bank (SARB) reduces its policy rate at its November meeting, the BoN would likely follow suit.
“However, even if the SARB maintains its current rate, the BoN still has room to ease monetary policy further, provided domestic conditions remain favourable and foreign reserves stay adequate,” she said.
According to FNB’s latest Monetary Policy Committee (MPC) Review, the October rate cut, which came earlier than market expectations, signals the central bank’s confidence in its foreign reserves and readiness to support growth amid slowing economic activity.
Real GDP growth eased to 1.6% year-on-year in the second quarter of 2025, weighed down by contractions in agriculture, manufacturing, and fishing.
“The 25bp cut, though earlier than expected, will boost economic activity and reflects the Bank’s recognition of rising financial stability risks from elevated borrowing costs despite solid mining and construction activity. The MPC reaffirmed a data-dependent stance, balancing the need to support growth with maintaining price and external stability,” the review stated.
The BoN now forecasts GDP growth to moderate to 3.5% in 2025 before strengthening to 3.9% in 2026, supported by agricultural recovery and higher uranium and gold output. Inflation remains stable, averaging 3.6% at the end of September compared to 4.6% a year earlier, with the outlook revised slightly lower for 2025.
BoN Governor Johannes !Gawaxab cautioned that inflation risks persist, particularly from oil price volatility and exchange rate fluctuations, but said they are expected to remain within the Bank’s target range.
Private Sector Credit Extension (PSCE) grew by 5.8% in August, driven mainly by corporate borrowing in construction, manufacturing, and mining.
Meanwhile, foreign reserves stood at N$54.7 billion (approximately US$3.12 billion) at the end of September, equivalent to 3.6 months of import cover — a level the central bank considers sufficient to maintain the Namibian dollar’s peg to the South African rand.
“Overall, monetary policy remains accommodative, supporting domestic recovery while safeguarding price and external stability as the economy is expected to undergo structural changes in 2026,” the FNB review concluded.
