The Bank of Namibia’s (BoN’s) Monetary Policy Committee (MPC) yesterday announced that it opted for stability over stimulus, keeping the repo rate unchanged at 6.50% as it confronts a slowing domestic economy and an increasingly fragmented global monetary landscape.
The unchanged repo rate means that both loan repayments and interest returns at commercial banks will remain unchanged for now.
Analysts believe that maintaining the repo rate at 6.50% signals that monetary stability takes precedence.
“With growth soft but inflation contained and the currency peg intact, the MPC appears determined to balance prudence with patience as 2026 unfolds,” a local economist commented.
The MPC announced its decision yesterday following its first meeting of 2026, held on 16 and 17 February.
The MPC unanimously agreed to maintain the repo rate at 6.50%, signalling a cautious approach aimed at safeguarding the Namibia Dollar’s peg to the South African Rand while avoiding further strain on fragile growth.
The MPC’s decision comes against a backdrop of moderating global inflation and steady global growth.
The International Monetary Fund’s January 2026 World Economic Outlook update states that global growth is projected to hold at 3.3% in 2026, which is a slight upward revision, before easing marginally in 2027.
Inflation across advanced and emerging markets continues to cool, with global price pressures expected to decline to 3.8% this year.
Commodity markets, however, are sending mixed signals for the domestic economy.
Gold prices remain near historic highs, uranium demand is firm, and zinc and copper have edged upward on supply concerns.
However, diamond prices remain under pressure amid rising competition from lab-grown alternatives and elevated inventories.
Oil prices have also ticked up again on renewed geopolitical tensions, posing upside risks to inflation.
At yesterday’s repo rate announcement, BoN governor Ebson Uanguta noted that, domestically, the picture is more sobering.
Real gross domestic product growth slowed during the first three quarters of 2025, weighed down by contractions in agriculture, fishing, mining and manufacturing.
High-frequency indicators point to subdued momentum, prompting expectations that 2025 growth will undershoot earlier projections.
“In determining the appropriate monetary policy stance, the MPC noted the sustained appreciation of the exchange rate, which has assisted to rein in inflation. The Committee further considered the weaker domestic economic activity and private sector credit extension as well as benign inflation projections,” Uanguta stated.
Meanwhile, inflation has, however, offered policymakers some breathing room.
Average inflation fell to 3.5% in 2025 and slowed further to 2.9% in January 2026, helped by easing food and transport costs.
In this regard, domestic inflation is projected to remain contained at around 3.5% this year.
Private sector credit extension remains muted, underscoring weak business and consumer appetite for borrowing despite relatively stable rates.
Meanwhile, Namibia’s external position has strengthened, with the merchandise trade deficit narrowing sharply by 35.4% to N$25 billion in 2025, driven by uranium and gold exports.
-ebrandt@nepc.com.na