WINDHOEK: The Bank of Namibia (BoN) has decided to keep the repo rate unchanged at 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 believes that the benefits of sustaining the current low interest rate, going forward, are greater than the costs associated with such, particularly given medium-term growth expectation.
“To this effect, the bank resolved to keep the repo rate unchanged at the current level of 5,50 per cent,” he noted. Shiimi said the bank remains committed to supporting growth. It, however, remains vigilant in assessing levels of household debt, and will act on such should intervention be required, going forward.
The bank is also of the view that the medium-term outlook remains overshadowed by uncertainty, and pervasive risks to global growth continue to threaten demand for Namibia’s exports and thus growth, foreign exchange reserves and import coverage.
Furthermore, he said, elevated and downward sticky food and energy prices continue to present externally-driven cost-push inflation risks to Namibia.
Meanwhile, the stock of official foreign reserves remains healthy, and continues to support the currency peg. The Namibian Dollar is pegged to the South African Rand.
Despite this, the Governor said, growth in credit to households, particularly for ‘non-productive’ uses, remains of concern as they tend to fund imported goods, which depend on foreign exchange reserves.