The Bank of Namibia has increased the repo rate by 25 basis points to 7.00%, pushing the prime lending rate to 10.50%, in a move expected to raise borrowing costs for households and businesses amid mounting inflationary pressures.
The decision, announced on Wednesday, follows the Monetary Policy Committee’s (MPC) fifth meeting of the year, held on 26 and 27 October, during which members unanimously agreed to tighten monetary policy to protect the Namibia Dollar’s peg to the South African Rand.
Bank of Namibia Governor Ebson Uanguta said the decision was necessary to contain inflationary pressures caused by rising fuel prices and reduce the interest rate gap between Namibia and South Africa.
“This policy stance is deemed appropriate to safeguard the one-to-one link between the Namibia Dollar and the South African Rand and mitigate against second-round effects induced by high fuel prices,” Uanguta said.
He added that the central bank had considered “the need to reduce the interest rate gap between Namibia and the anchor country to stem potential capital outflows and safeguard the stock of international reserves.”
The latest adjustment means borrowers with variable-rate home loans, vehicle finance and other credit facilities linked to the prime lending rate could face higher monthly repayments.
The decision comes as Namibia’s annual inflation rate accelerated to 5.4% in September 2026, up one percentage point from June, largely driven by rising transport costs.
“Inflationary pressures have persisted domestically, thereby disrupting the disinflation trend observed up to March this year,” Uanguta said in the monetary policy statement.
The central bank has revised its inflation forecast upwards, projecting average inflation of 4.2% in 2026 compared with 3.5% in 2025, before easing slightly to 4.0% in 2027.
The revised projections represent increases of 0.2 percentage points for 2026 and 0.1 percentage points for 2027, reflecting expectations that elevated global energy prices will persist.
According to Uanguta, Brent crude oil prices recently surged to approximately US$116 per barrel, their highest level in more than six months, as geopolitical tensions in the Middle East disrupted energy markets.
“Crude oil prices surged above US$100 per barrel most recently, mainly due to elevated tensions in the Middle East,” he said.
The higher oil prices are expected to continue placing pressure on domestic transport costs and consumer prices.
