The Bank of Namibia has kept its benchmark interest rate unchanged for the second consecutive meeting, maintaining the repo rate at 6.50% as policymakers prioritize currency stability and steady capital flows in Africa’s southern region.
The decision, announced in Windhoek, marks the first monetary policy meeting chaired by new Governor Ebson Uanguta, who recently assumed leadership of the central bank. By holding rates steady, the Bank signaled continuity in its cautious approach, focusing on macroeconomic stability amid global uncertainty and regional monetary dynamics.
Namibia operates a currency peg that links the Namibian dollar to the South African rand on a one-to-one basis. This arrangement means the country’s monetary policy is closely aligned with that of the South African Reserve Bank. Any significant deviation in interest rates could disrupt capital flows or place pressure on the peg, making policy coordination essential.
In its statement, the central bank emphasized the need to safeguard financial stability and maintain investor confidence. Policymakers noted that inflation remains relatively well-contained, easing immediate pressure for further tightening. While price growth has fluctuated in recent years due to global energy and food costs, recent data suggests inflationary pressures have moderated compared to earlier peaks.
The decision to pause again reflects a broader regional trend, as several African central banks shift from aggressive tightening cycles toward a more balanced stance. Over the past two years, many emerging markets raised rates sharply to combat inflation driven by supply chain disruptions, commodity volatility, and currency depreciation. With inflation now stabilizing in parts of the continent, attention has turned toward supporting economic growth without jeopardizing macro stability.
For Namibia, preserving the currency peg is a top priority. The peg underpins trade and investment flows, particularly with South Africa, which remains Namibia’s largest trading partner. A stable exchange rate framework reduces uncertainty for businesses engaged in cross-border commerce and helps anchor inflation expectations.
Governor Uanguta’s first policy decision suggests a measured and continuity-driven approach rather than an abrupt shift in strategy. Market analysts had widely anticipated the hold, viewing it as a signal that the central bank is comfortable with current monetary conditions while remaining alert to external risks, including global interest rate movements and commodity price swings.
Namibia’s economy has shown gradual recovery momentum following pandemic-era disruptions, supported by mining, agriculture, and renewed investment activity. However, growth remains vulnerable to external shocks, particularly fluctuations in global demand and regional financial conditions. Keeping rates steady allows policymakers to monitor economic data without introducing additional borrowing costs that could dampen domestic investment.
The central bank also highlighted the importance of stable capital flows. In smaller open economies like Namibia, sudden outflows can create exchange rate pressures and reduce foreign reserve buffers. By aligning policy closely with regional benchmarks and maintaining a predictable rate path, authorities aim to reassure investors and limit volatility.
Financial markets reacted calmly to the announcement, as the outcome matched expectations. The focus now shifts to upcoming inflation data and external monetary developments, particularly policy signals from South Africa and major global economies, which often influence emerging market capital dynamics.
For households and businesses, the unchanged repo rate means borrowing costs remain steady for now. Commercial lending rates, mortgage terms, and business financing conditions are likely to hold at current levels in the near term, offering some predictability in planning and investment decisions.
As Namibia navigates a complex global environment marked by shifting commodity markets and geopolitical tensions, the Bank of Namibia’s steady-hand approach underscores a commitment to prudence. The message from Windhoek is clear: stability comes first, especially when safeguarding the currency framework that anchors the broader economy.
