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Central bank holds repo rate at 7.75%, citing stable economic environment

Central bank holds repo rate at 7.75%, citing stable economic environment

The Monetary Policy Committee (MPC) has opted to maintain the repo rate at 7.75 %, the Bank of Namibia Governor, Johannes !Gawaxab announced on Wednesday.

Consequently, the prime lending rate remains unchanged at 11.50%. This decision comes in the wake of careful consideration of both global and domestic economic conditions, he said.

“With real interest rates remaining positive, and slow credit growth, amid a fair level of international reserves, the MPC decided to maintain the Repo rate at its current level. This policy stance will continue to safeguard the one-to-one link between the Namibia Dollar and the South African Rand
and support domestic economic activity,” he added.

!Gawaxab meanwhile said domestic economic activity expanded during 2023, as reflected in sectors such as mining, electricity generation, livestock farming, wholesale and retail trade, tourism, communication, and transport.

“Activity in the construction sector remained weak. Going forward, GDP growth is projected to decelerate from a revised 6.4% in 2022 to 3.9% in 2023 and further down to 3.4% in 2024. The downward trajectory in growth is characterised by the expected slower growth in the primary and secondary industries, in part due to uncertain weather conditions,” he said.

In terms of inflation, !Gawaxab said the annual inflation moderated to 5.9% in 2023 from 6.1% in 2022, mainly owing to a deceleration in the transport category.

Likewise, inflation slowed since the previous MPC meeting from 6% in October 2023 to 5.4% in January 2024.

“Inflationary pressures are expected to continue receding with consumer price inflation projected to average 4.8%t in 2024, unchanged compared to the previous forecast,” he concluded.


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