Chamwe Kaira
Standard Bank Namibia has said that given the Bank of Namibia’s emphasis on closing the differential with South Africa and the current 25 basis points (bps) gap, its expectation is that the Bank of Namibia will keep rates unchanged until the South African Reserve Bank (SARB) fully closes the differential through further cuts.
“Only then would BoN begin its own easing cycle. In this scenario BON will only deliver two 25bps cuts in tandem with South Africa,” Standard Bank economist Helena Mboti has said.
The Bank of Namibia is expected to make its first monetary policy decision for 2026 this week.
Following the 25bps cut by the South African Reserve Bank (SARB) in November 2025, the Bank of Namibia (BON) held its repo rate at 6.50% in December 2025.
“This reduced the interest rate differential from 50bps to 25bps. BON explicitly highlighted the importance of narrowing the differential with SARB, while noting that lower borrowing costs would support consumers in 2026,” said Mboti.
She noted that the SARB kept rates unchanged at the January meeting at 6.75%. “Our view is that South African inflation is sufficiently contained, supported by an optimistic medium-term outlook and currency strength, giving SARB scope to frontload easing to stimulate weak GDP growth. We now expect three 25bps cuts from the SARB in 2026, rather than one previously anticipated,” she said.
However, Mboti said there is meaningful risk to Standard Bank’s baseline. Mboti said if global central bank communication and guidance from the SARB signal a clearly established easing cycle, the Bank of Namibia could move ahead of SARB and cut rates pre-emptively, temporarily widening the differential back to 50bps.
“Policymakers may be comfortable doing so, as long as reserves remain adequate to support a wider differential.”
She added that in a more aggressive global and regional cutting environment, this creates scope for BON to frontload easing in 2026, potentially delivering three 25bps cuts.
“Even with an initial widening, the differential would likely remain between 25–50bps range. Such a move would be consistent with BON’s domestic mandate, particularly against the backdrop of weak private sector credit extension (PSCE), subdued GDP growth, improving non-performing loans (NPLs) signaling lower default risk. Collectively, these factors provide a credible macroeconomic basis for a more assertive easing cycle than implied in our baseline view,” she said.
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Helena Mboti
