Namibia cuts rate 50 bps to 5.50% to counter weak outlook

    The Bank of Namibia cut its benchmark repurchase rate by 50 basis points to 5.50 percent to counter the potential negative drag on the domestic economy from lower global growth.
    The central bank of Namibia said inflationary pressures were rising but its monetary policy committee had concluded that inflation would remain within tolerable, single-digit ranges and official reserves remained sufficient to support the currency peg.
    The uncertain state of the global economy was casting a shadow over Namibia's economy and some leading indicators had suggested a moderation of growth going forward, the bank said.
    "In view of the above, the MPC finds that a measure of monetary policy easing is necessary to support the ailing sectors of the economy and further shore up the subdued growth outlook," the bank said in a statement.
    The central bank has held its repo rate unchanged at 6.0 percent since December 2010.
    Inflation in Namibia rose to 6.0 percent in July from 5.6 percent in June, reversing a declining trend. But the bank said the rise reflected higher prices reflected recent hikes in the cost of food and administered prices that were implemented in July. 
    Namibia's economy performed better in the first half of this year compared with last year, the bank said, with GDP growth up 0.8 percent in the first quarter from the previous quarter.
    "On the other hand, a slowdown of external demand is likely to put pressure on export earnings and overall GDP growth going forward, notwithstanding some positive developments observed during the first half of the year," the bank said.
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