Chamwe Kaira
The Bank of Namibia’s (BoN) monetary policy committee (MPC) has kept the repo rate unchanged at 6.50%.
BoN governor Johannes !Gawaxab said commercial banks are expected to keep their prime lending rate at 10.125%.
“This policy stance is deemed appropriate for safeguarding the one-to-one link between the Namibia Dollar and the South African Rand, while remaining supportive of domestic economic activity,” he said during the announcement this week.
!Gawaxab said the committee considered ongoing global policy uncertainty and potential risks to the domestic economy.
He noted that South Africa’s formal adoption of a 3% inflation target requires “additional vigilance by the Namibian authorities in managing domestic inflation to ensure the continued smooth functioning of the exchange rate peg.”
He said domestic economic activity has slowed, but the broader outlook remains positive.
Current and projected inflation remain contained, and growth is expected to recover in the medium term. He also said capital flows are orderly and the recent Eurobond redemption went smoothly.
“Narrowing the interest rate differential with South Africa was equally deemed essential,” he added.
He said the normalisation of the prime-repo rate spread by the end of the year is expected to support the economy, bringing the prime rate to 10%.
The next MPC meeting will take place on 16 and 17 February 2026.
Real GDP growth is now expected to ease from 3.7% in 2024 to 3% in 2025, a downward revision of 0.5 percentage point. Growth is projected to recover to 3.8% in 2026 and 4.3% in 2027.
“This recovery is expected to be primarily underpinned by a rebound in the agriculture sector, a sustained upturn in construction, robust electricity generation and stronger output from the uranium subsector,” !Gawaxab said.
He warned that risks remain, including possible drought, infrastructure constraints and weak global demand.
The inflation forecast for 2025 remains at 3.6%. The 2026 projection has been lowered by 0.2 percentage point to 3.8% because of stronger exchange rate expectations and a favourable oil price outlook.
Risks include exchange rate volatility and possible increases in administered and oil prices.
Caption
Johannes !Gawaxab
