Namibia Hikes Interest Rate to 7.75%

Namibia’s central bank on Wednesday raised its primary lending rate by 50 basis points (bps) to 7.75%. The country has seen its consumer price index popping, a development that triggered inflation fighting in line with global trends.

Authority indicates that today’s high rate booking came as the inflation rate in the country spiked, it recent consumer price index show. But government hints about seeking balance in a way that aligns with economic growth expectations for the year.

Central Bank chief reveals that the tightening policy is to contain inflation. However, this will safeguard the one-to-one link between the Namibian dollar and the South African rand. The monetary policy authority had raised the lending rate by 25 bps at previous policy meetings in April and February.

Namibia’s annual inflation stood at 6.3% last month, up from 6.1% in April, with food and non-alcoholic beverages among major contributors, data from the statistics agency showed on Tuesday.

In May, neighbouring South Africa hiked its policy rate by 50 bps to 8.25% as it raised its inflation forecasts for this year and next.

Bank of Namibia Governor Johannes Gawaxab said on Wednesday that the bank expected real gross domestic product growth to slow down to 3% this year from 4.6% in 2022.

Namibia central bank had opted for a 50 bps hike this time around rather than 75 bps so as to support the economy, the apex bank governor in the country said.