Central Bank reduces repo rate to 4%
The Bank of Namibia on Wednesday, 17 June decided to cut the repo rate by another 25 basis points from 4.25% to 4%, bringing short-term interest rates to the lowest levels since Independence. This brings the total reduction in the repo rate for this year to an unprecedented 250 basis points.
Wednesday’s adjustment still leaves the Namibian repo rate 25 basis points above the South African repo rate, which is at 3.75%.
Deputy Governor of the Bank of Namibia, Ebson Uanguta said the rate is appropriate to continue supporting domestic economic activity, while at the same time safeguarding the one-to-one link between the Namibia Dollar and the South African Rand.
He confirmed that while interest rates are lower in South Africa than in Namibia, assets are performing better in Namibia given the sound performance of the banking industry.
“The monetary policy committee had to balance the need for further monetary stimulus in the face of the (Covid-19) pandemic-induced weakness in the economy, against the importance to not undermine sound saving and investment decisions in the economy,” Uanguta said.
Meanwhile, as at 31 May, the stock of international reserves stood at N$33.7 billion, compared to N$33 billion reported in April. This amount is estimated to cover 5.1 months of goods and services imports.
