Namibia’s central bank has opted to keep its policy rate unchanged at 7.75%, citing anticipated inflation deceleration in the coming year, sustained economic slack, and sluggish credit growth. This decision marks the third consecutive “hold” stance after previous increases earlier in 2023.
Key Points:
- Unchanged Policy Rate:
- Namibia’s central bank, the Bank of Namibia, has chosen to maintain its policy rate at 7.75%. This decision follows three consecutive “hold” decisions after rate hikes earlier in 2023.
- Factors Influencing Decision:
- The central bank cited several factors for its decision, including a projected slowdown in inflation for the upcoming year, ongoing economic slack, and subdued credit growth.
- Recent Monetary Policy Adjustments:
- Earlier in 2023, the Bank of Namibia raised the policy rate by 50 basis points in June and twice by 25 basis points, leading to the current rate of 7.75%.
- Inflation Trends:
- Inflation in Namibia increased to 6.0% year on year in October, up from 5.4% in September. Despite this uptick, the central bank anticipates a decline in inflation to 4.8% in the next year, aligning with the forecast provided in the previous Monetary Policy Committee (MPC) meeting in October.
Conclusion: The decision by Namibia’s central bank to maintain its policy rate reflects a careful assessment of economic conditions, inflation projections, and credit market dynamics. The commitment to a “hold” stance indicates a strategic approach to balance economic factors and promote stability. Monitoring inflation trends and economic slack will likely continue to play a crucial role in future monetary policy decisions to support Namibia’s economic resilience.
