The Bank of Namibia (BON) has warned that inflationary pressures will persist for the rest of the year.
Speaking at a media briefing in the capital on Wednesday where the central bank announced that it had kept the repo rate unchanged at 5.5%, Governor Ipumbu Shiimi warned that rand depreciation coupled with high oil prices and the on-going industrial action in Namibia’s biggest trading partner – South Africa – make it likely that inflationary pressures will continue until year end. Although it has rebounded slightly, the rand slumped to a three-and-a-half year low of R8.995 on 08 October following weeks of wild cat strikes and credit downgrades by Moody’s and Standard and Poor’s.
Latest figures from the Namibia Statistics Agency showed that annual inflation rose significantly from 5.8% in August to 6.7% in September. But despite the rising inflation and concerns of increasing instalment credit, the bank left the repo rate unchanged.
Responding to queries from reporters, Shiimi defended the bank’s stance on the repo rate. He said although continued strong growth in instalment credit, particularly to individuals, remains cause for concern as such credit turns to be non-productive and increases the debt burden and debt servicing costs of households, increasing the repo rate to tame inflation was a judgement call.
He added that although the bank is worried at the rising instalment credit, it was still healthy. In August, growth in instalment credit stood at 18.1%.