Namibian borrowers are expected to save at least N$314 million annually following a 25-basis-point reduction in commercial banks’ lending rates implemented by December 2025, Finance Minister Ericah Shafudah has revealed.
The adjustment, directed by the Bank of Namibia, narrowed the prime-minus-seven repo spread from 3.75% to 3.50%, lowering borrowing costs for households and businesses across the economy.
“The central bank also mandated a 25-basis-point reduction in commercial banks’ lending rates by December 2025, narrowing the Namibian prime-minus-seven repo spread from 3.75% to 3.50%. This initiative offers major benefits to all borrowers, with annual savings of at least N$314 million,” Shafudah said.
The lending rate reduction followed cumulative repo rate cuts of 50 basis points during 2025, which brought the policy rate to 6.50% as authorities sought to support domestic economic activity while maintaining the Namibia dollar’s peg to the South African rand.
In February 2026, the Monetary Policy Committee (MPC) kept the repo rate unchanged at 6.50%, adopting a cautious stance amid moderating inflation and weaker economic momentum.
The Bank of Namibia adjusts the repo rate to influence lending conditions, stimulate economic activity and safeguard external stability under the currency peg arrangement.
Simonis Storm Research said monetary policy is expected to remain cautiously supportive in 2026 following the easing cycle of the past two years.
“With inflation pressures largely contained and domestic demand recovering unevenly, the Bank of Namibia is likely to maintain a measured, data-dependent policy stance, balancing growth support against the need to preserve external stability and the currency peg,” the firm said.
The research house expects limited scope for additional easing, projecting at most two further 25-basis-point rate cuts in 2026, conditional on inflation remaining within target and the interest rate differential with South Africa remaining appropriate.
Under this scenario, the repo rate is likely to average between 6.00% and 6.25% in 2026, implying positive real interest rates in an environment of low to mid-single-digit inflation.
Simonis Storm cautioned that although borrowing costs are now lower than during the 2023–2024 tightening phase, monetary policy alone is unlikely to drive a broad-based increase in demand given high unemployment levels and constrained household balance sheets.
