WINDHOEK: The Bank of Namibia (BoN) has decided to reduce the repo rate by 50 basis points to 5,50 per cent.

The repo rate is the rate at which private banks borrow money from the central bank.

Announcing the BoN’s monetary policy stance for the next two months in the capital on Wednesday, Governor Ipumbu Shiimi said the bank resolved that the repo rate reduction will be effective as from Thursday (23 August).

The decision was taken in an effort to support ailing sectors of the economy and to further shore up the subdued growth outlook.

“The bank remains concerned about rapid growth in consumer credit extension and thereby underscored its readiness to implement targeted policy actions in the event of renewed pressures on the country’s external position,” he said.

The bank will continue to monitor development in both the domestic and global economies and react appropriately, in line with its mandate.

Shiimi further stated that the elevated risks to global growth have potential spill-over effects for the domestic economy in light of the trade linkages and openness of the Namibian economy.

The bank also noted rising inflationary pressures, but concluded that inflation will still remain within tolerable ranges for the foreseeable future.

Meanwhile, the BoN Governor said, the stock of official foreign reserves remains sufficient and augurs well for supporting the currency peg.

The Namibian Dollar is pegged to the South African Rand.