The Monetary Policy Committee (MPC) of the Bank of Namibia on Wednesday decided to keep the repo rate unchanged at 3.75%.
“MPC is of the view that the accommodative monetary policy remains appropriate to support the weak domestic economic activity that is still being weighed down by the COVID-19 pandemic. At this level, the Repo rate is deemed appropriate to safeguard the one-to-one link between the Namibia dollar and the South African Rand, while meeting he country ‘s international financial obligations,” BoN Governor, Johannes! Gawaxab said.
“The Committee has noted the increasing trend in inflation globally, and recognized its potential impact on the monetary policy going forward.”
The MPC’s decision was in line with analysts’ expectations.
“This was in line with our expectations, as we do not see any economic justification of an interest rate hike at this point in time,” Simonis Storm Economist Theo Klein said.
He said the widely expected decision by the South African Reserve Bank (SARB) to increase its Repo rate by 25 basis points in November, will align the Repo rates in Namibia and South Africa.
“In practice, there is a degree of deviation in interest rates that can be tolerated. We therefore do not expect an interest rate hike by BoN before the end of this year. It is widely expected that rising inflation will be one of the reasons prompting the SARB to hike its repo rate in their November meeting, “he said.
He said the current low interest rate regime provides relief to indebted households and businesses.
“Given the expectation of persistent weak credit demand, current low interest rates remain favorable, with no need to hike from a Private Sector Credit Extension perspective,” the Simonis Storm Economist said.
