The Bank of Namibia (BoN) has welcomed South Africa’s decision to reduce its inflation target to 3% , with a 1% tolerance band, saying it will support Namibia’s price and interest rate outlook over the long term.
BoN Governor Johannes !Gawaxab said the lower target is expected to gradually result in reduced interest rates in both countries.
“By committing to tighter price stability, the new target will help entrench disinflationary discipline across the economy, reduce long-term borrowing costs, and strengthen investor confidence over the medium to long term,” he said.
He said the move is consistent with Namibia’s long-standing commitment to price stability as a member of the Common Monetary Area, which also provides benefits such as reduced transaction costs and access to deeper financial markets.
!Gawaxab cautioned that the full impact may be limited by Namibia’s high share of administered prices, including utilities and regulated services. He said the Bank will continue engaging key players involved in wage and price setting to protect monetary stability.
“This, in turn, supports household purchasing power, eases financing conditions for firms, and reinforces the foundation for stronger, more durable economic growth,” he said.
South Africa announced the revised inflation target on 12 November 2025, replacing the previous 3–6 percent range.
The BoN said the stricter target should help strengthen domestic price stability, supported by the one-to-one peg between the Namibian dollar and the rand.
