Namibia's Central Bank Cuts Interest Rate

By Nyasha Nyaungwa

WINDHOEK (Reuters) – Namibia's central bank cut its main interest rate for the second consecutive meeting on Wednesday, citing a surprisingly rapid decline in inflation and the need for more economic support.

The Monetary Policy Committee (MPC) unanimously decided to lower the repo rate by 25 basis points to 7.25%, matching the cut size from August’s meeting.

Governor Johannes !Gawaxab stated in a press release that the MPC considered the increasing momentum of the international trend towards monetary policy easing, alongside a medium-term reduction in domestic inflation and a lower-than-expected inflation reading for September 2024.

Annual inflation in Namibia dropped to 3.4% in September, down from 4.4% in August.

The bank revised its average inflation forecast for this year down to 4.3%, compared to 4.7% at the last meeting, attributing this to a better outlook for international oil prices and a stronger domestic exchange rate.

Private sector credit extension remains weak, indicating further support for the domestic economy is needed.

!Gawaxab noted, "The domestic economy, while growing at a moderate pace, was operating below full capacity."

Growth is expected to slow to 3.1% in 2024, down from 4.2% in 2023.

With respect to a $750 million Eurobond redemption due in late 2025, the central bank governor mentioned that Namibia has reserved 82% of the $500 million needed for retirement at maturity. The government aims to refinance the remaining $250 million, according to !Gawaxab.