Inflation slows but central bank keeps repo rate steady
In a significant development for Namibia’s economic landscape, the inflation rate has shown a notable deceleration, averaging 5% during the first quarter of 2024. Bank of Namibia Governor, Johannes !Gawaxab, announced this on Wednesday, highlighting a marked decrease from the 7% average recorded during the same period in 2023.
The slowdown has primarily been attributed to lower prices in food and transport, signaling positive trends within the country’s economic dynamics, as noted by !Gawaxab. Specifically, inflation dipped to 4.5% in March 2024, compared to 5.4% reported in January 2024, as indicated at the previous Monetary Policy Committee (MPC) meeting.
Despite these positive indications, !Gawaxab warned about potential factors that could lead to a slight uptick in inflation. He pointed to persistent geopolitical tensions and uncertain rainfall conditions, which might trigger speculative increases in oil prices.
“Looking ahead, inflation is expected to moderate to 4.9% in 2024, just 0.1 percentage point above the projection made at the previous MPC meeting,” he stated.
Considering these factors, the central bank opted to maintain the repo rate at 7.75%, with the prime lending rate remaining unchanged at 11.50%.
“The MPC acknowledged the persisting global inflation and various inflation risks but found reassurance in the downward trajectory of domestic inflation and the positive real interest rates domestically, which contribute to containing inflationary pressures,” !Gawaxab explained.
Moreover, the announcement addressed concerns regarding international reserves, deemed sufficient, while highlighting subdued domestic credit growth as an ongoing challenge.
!Gawaxab reiterated that the central bank’s policy stance serves to uphold the one-to-one link between the Namibia Dollar and the South African Rand while also bolstering domestic economic activity.
