Central Bank keeps repo rate unchanged at 3.75%
The Monetary Policy Committee (MPC) of the Bank of Namibia has decided to keep the repo rate unchanged at 3.75%.
Bank of Namibia Governor Johannes !Gawaxab said the decision to keep the repo rate unchanged was taken following a review of global, regional and domestic economic and financial developments.
“The MPC is of the view that at 3.75%, the repo rate remains appropriate to continue supporting the weak domestic economy while at the same time safeguarding the one-to-one link between the Namibia Dollar and the South African Rand,” !Gawaxab said.
At this rate, Namibia’s repo rate is is slightly higher than that of South Africa, which the Reserve Bank of South Africa decided to keep unchanged at 3.5% on March 25.
!Gawaxab said the annual average inflation increased to 2.7% during the first two months of 2021, compared to 2.3% for the corresponding months in the previous year.
“The increase in inflation was mainly reflected in the food and beverages categories during the period under review. On a monthly basis, overall inflation stood at 2.7% in February 2021, the same as the previous month. Overall inflation is projected to average around 3.2% for 2021.
Domestic economic activity contracted substantially in 2020 relative to 2019 and remains weak year-to-date.
As at the 31st of March 2021, the stock of international reserves stood at N$34.7 billion compared to N$34.4 billion reported in February 2021, was mainly due to an inflow resulting from diamond sales, which was partly offset by the appreciation of the NAD against the USD.
The MPC noted the increase in international reserves in early April 2021 to N$38.7 billion resulting from the disbursement of the IMF Rapid Financing instrument and SACU receipts.
“At this level, the reserves remain sufficient to protect the peg of the Namibia Dollar to the South African Rand, while meeting the country’s international financial obligations,” the governor said.
The next meeting of the MPC will be held on the 15th of June 2021.