Africa-Press – Namibia. TO continue safeguarding the peg between the Namibia Dollar and the South African Rand, while supporting the domestic economy amid heightened global policy uncertainty, the Monetary Policy Committee (MPC) of the Bank of Namibia unanimously decided to keep the repo rate unchanged at 6.75%, keeping interest rates stable.
Johannes !Gawaxab, the Governor of the central bank, explained that the MPC considered the extraordinary level of uncertainty introduced to the global economy by trade policy shifts, which is likely to dampen growth.
“The MPC added that the potentially slower global growth would lower the projected trajectories of most commodity prices, oil included, but this favourable impact on domestic inflation seemed to be offset by a weaker exchange rate. Some upward price pressures from administered prices also seemed likely in the coming months. Accordingly, the MPC was in broad agreement with a projected trajectory for inflation that accelerates moderately but then straddles levels around 4.5% in the medium term,” !Gawaxab said.
He added that while the relatively high level of domestic real interest rates, the adequate level of foreign reserves, and sluggish credit growth suggested the possibility of a further reduction in the repo rate, the MPC was cognisant of the need to avoid a significant interest rate differential within the Common Monetary Area (CMA), in the interest of orderly capital flows.
“The Committee was also mindful of the magnitude of the trade deficit and the impact of the imminent settling of international debt obligations on the country’s international reserve holdings. Against this background, the MPC decided to keep the repo rate unchanged at 6.75%. Commercial banks are accordingly expected to maintain their prime lending rates at 10.50%. This policy stance will continue safeguarding the one-to-one link between the Namibia Dollar and the South African Rand while supporting domestic economic activity,” !Gawaxab said.
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