Namibia's central bank left its benchmark interest steady and while it lowered its forecast for inflation this year, it also "noted the increasing trend in inflation globally and recognized its potential impact on monetary policy going forward."
The Bank of Namibia's (BoN) monetary policy committee (MPC) kept its repo rate at 3.75 percent, unchanged since August 2020 when it was cut for the fifth time last year to support the economy from the negative impact on activity during the COVID-19 pandemic.
The Bank of Namibia's (BoN) monetary policy committee (MPC) kept its repo rate at 3.75 percent, unchanged since August 2020 when it was cut for the fifth time last year to support the economy from the negative impact on activity during the COVID-19 pandemic.
"The MPC is of the view that at 3.75 percent, the Repo rate remains appropriate to continue supporting the weak domestic economy that is still being weighed down by the COVID-19 pandemic," the bank said, adding the current level of the repo rate also safeguards the one-to-one link between the Namibian dollar and the South African Rand.
Namibia's inflation rate averaged 3.5 percent in the first 9 months of the year, up from 2.2 percent in the same 2020 period, mainly due to base effects, food and transport prices.
But after rising in the first half of the year, inflation has eased since July, falling to 3.5 percent in September from June's 4.1 percent. Inflation was 3.4 percent in August.
The central bank lowered its forecast for inflation to average 3.7 percent in 2021 from a previous forecast of 3.9 percent, and omitted a reference in its August policy statement to the risk to the sustainability of the current repo rate from higher inflation.
Last year BoN cut its repo rate 5 times and by a total of 2.75 percentage points, slightly less than South Africa's 3.0 percentage point reduction.
Namibia's current easing cycle began in August 2017 and since then BoN has lowered the rate 3.25 percentage points, also slightly less than the South African Reserve Bank (SARB), which has lowered its rate 3.50 percentage points since July 2017.
"Namibia's real GDP improved in the second quarter of 2021, while economic activity remained subdued year-to-date," the bank said, adding inflation has continued to rise while growth in private sector credit expansion (PSCE) has declined.
"Namibia's real GDP improved in the second quarter of 2021, while economic activity remained subdued year-to-date," the bank said, adding inflation has continued to rise while growth in private sector credit expansion (PSCE) has declined.
Namibia's gross domestic product grew 1.6 percent year-on-year in the second quarter, the first positive result after 5 consecutive quarters of contraction.
BoN forecast growth this year of 1.4 percent and 3.4 percent in 2022, with risks to the outlook from sudden surges in the pandemic and disruptions to economic activity from restrictions.
BoN forecast growth this year of 1.4 percent and 3.4 percent in 2022, with risks to the outlook from sudden surges in the pandemic and disruptions to economic activity from restrictions.
Namibia's inflation rate averaged 3.5 percent in the first 9 months of the year, up from 2.2 percent in the same 2020 period, mainly due to base effects, food and transport prices.
The central bank forecast average inflation of 3.7 percent in 2021, slightly lower than the previous forecast of 3.9 percent.
The central bank forecast average inflation of 3.7 percent in 2021, slightly lower than the previous forecast of 3.9 percent.
Growth in PSCE eased to an average of 2.5 percent in the first 8 months of this year, down from 4.1 percent in the same period last year, due to lower demand for credit by both businesses and households.
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