The Bank of Namibia is widely expected to leave its repo rate unchanged at 6.50% when the Monetary Policy Committee announces its decision on Wednesday, as rising fuel costs and global supply disruptions complicate prospects for interest rate cuts.
The expected hold comes despite inflation easing to 2.1% year-on-year in March, down from 2.4% in February, as economists warn that the slowdown in consumer prices is unlikely to be sustained.
Standard Bank Namibia economist Helena Mboti said inflation risks remain tilted to the upside, which is likely to keep policymakers cautious.
“We expect the Bank of Namibia to keep the repo rate unchanged at the upcoming MPC meeting. While headline inflation has recently moderated, this is expected to reverse in the near term as higher fuel prices and related cost pressures begin to filter through, alongside rising risks to food and imported inflation. These dynamics are likely to delay the easing cycle previously anticipated for 2026 and keep rates higher for longer,” she said.
Mboti said global oil price volatility linked to tensions in the Middle East, coupled with rising food costs and currency risks, could push inflation higher in the second quarter.
Simonis Storm Securities Head of Investments Max Rix said March’s inflation reading likely marked the bottom of the current cycle.
“The key point is that Namibia’s inflation cycle is now at a turning point. The latest CPI print still looks very benign, with headline inflation easing to 2.1% year-on-year in March, from 2.4% in February. However, we would be careful not to treat that number as a signal that inflation will continue moving lower. In our view, March is more likely to mark the trough in the current inflation cycle than the start of a new disinflation leg,” he said.
Rix said April fuel price hikes are expected to increase transport, food and production costs across the economy.
Petrol prices rose to N$22.08 per litre, while diesel increased to N$23.63 per litre for 50ppm and N$23.73 per litre for 10ppm.
High Economic Intelligence economist Lewis Komu said Namibia’s external position has also weakened, reducing room for policy easing.
“Since the 18 February 2026 decision, inflation has eased further, while private sector credit growth remains moderate and business-led. The external position has softened, with a wider trade deficit and lower reserve levels than a year earlier, though reserve cover remains adequate for the peg,” he said.
Komu said higher oil prices, freight charges and insurance costs linked to tensions around the Strait of Hormuz have introduced fresh upside risks to inflation.
He added that Namibia’s economy contracted by 0.5% year-on-year in the fourth quarter of 2025, with full-year growth slowing to 1.7%, highlighting weak domestic demand.
With inflation risks rising and economic growth remaining subdued, analysts say the central bank is likely to prioritise price stability and protecting the Namibia dollar’s peg to the South African rand over cutting rates in the near term.
Wednesday’s announcement will be the second monetary policy decision delivered by Ebson Uanguta since taking over as Governor of the Bank of Namibia.
