Interest rates unchanged until 14 February 2017
07 December 2916 – The Bank of Namibia announced that the repo rate will remain unchanged at 7%, following the bank’s Monetary Policy Committee’s meeting on Monday. The next meeting is scheduled for 14 February 2017 at which point the bank’s monetary policy will be re-assessed.
“The Monetary Policy Committee is of the view that at this level (7%), the repo rate is appropriate to support growth while maintaining the one-to-one link between the Namibia Dollar and the South African Rand” the bank stated.
The committee considers a number of global, regional and domestic indicators in its regular two-month meeting.
On the domestic front, it said economic activity continued to record slower growth during the first ten months of 2016 compared to 2015. “The weaker growth was mainly attributed to the declines in the production of diamonds, zinc, cement and blister copper, as well as, the construction, agriculture and transport sectors.”
Looking at some key local indicators, the bank said GDP is projected to grow only 2.5% this year, down from 5.3% last year. The average annual inflation rate rose to 6.6% during the first ten months of 2016 compared to 3.4% in 2015.
On a monthly basis, the annual inflation rate rose to 7.3% in October 2016 compared to 6.9% in September 2016. Annual inflation is projected to average 6.7% and 5.9% in 2016 and 2017 respectively.
Private sector credit extension (PSCE) grew by only 11.8% for the first ten months in 2016 compared to 15.5% for the same period in 2015. In October 2016 the annual growth in credit extended to individuals dropped to below 10%, the lowest since April 2011.
At 30 November 2016, the stock of international reserves stood at N$25.0 billion, an increase from N$22.6 billion recorded in the last Monetary Policy Committee statement. At this level, the stock of international reserves is estimated to be cover 3.3 months of import, higher than the 2.9 months reported two months ago.