#JustIn: At last! Interest rate relief
The Bank of Namibia (BoN) has lowered its repo rate by 25 basis points (bps) to 7.5%.
Making the announcement, BoN governor Johannes !Gawaxab said despite the gradual global disinflation, most monitored central banks have remained restrictive, even though some have taken the first step in easing monetary policy.
In Namibia, economic activity remained on a recovery path but with a lower growth rate forecast for 2024, in part due to drought-induced setbacks.
“There has been a welcome slowdown in inflation,” !Gawaxab said.
“Private sector credit extension has been weak for a protracted period, and the domestic economy, in aggregate, was also deemed in need of essential support,” he added.
“With inflation and inflation expectations slowing and nominal interest rates unchanged, real interest rates have increased, thereby signalling an effective tightening of monetary policy. International reserves remain adequate and have, in fact, increased further. Considering these factors, the MPC felt that a moderate easing of monetary policy was warranted,” !Gawaxab continued.
Commercial banks are expected to reduce their lending rates by 25 bps and to “speedily transmit the interest relief to borrowers”, !Gawaxab said.
The banks’ prime lending rate will, therefore, decline from 11.5% to 11.25%.
“This policy stance will continue to support domestic economic activity and safeguard the one-to-one link between the Namibia dollar and the South African rand, supported by the adequate stock of international reserves.
The Monetary Policy Committee (MPC) is of the view that, as the monetary policy easing cycle progresses, the margin between the repo rates of the Bank of Namibia and the South African Reserve Bank will again narrow,” !Gawaxab said.
Making the announcement, BoN governor Johannes !Gawaxab said despite the gradual global disinflation, most monitored central banks have remained restrictive, even though some have taken the first step in easing monetary policy.
In Namibia, economic activity remained on a recovery path but with a lower growth rate forecast for 2024, in part due to drought-induced setbacks.
“There has been a welcome slowdown in inflation,” !Gawaxab said.
“Private sector credit extension has been weak for a protracted period, and the domestic economy, in aggregate, was also deemed in need of essential support,” he added.
“With inflation and inflation expectations slowing and nominal interest rates unchanged, real interest rates have increased, thereby signalling an effective tightening of monetary policy. International reserves remain adequate and have, in fact, increased further. Considering these factors, the MPC felt that a moderate easing of monetary policy was warranted,” !Gawaxab continued.
Commercial banks are expected to reduce their lending rates by 25 bps and to “speedily transmit the interest relief to borrowers”, !Gawaxab said.
The banks’ prime lending rate will, therefore, decline from 11.5% to 11.25%.
“This policy stance will continue to support domestic economic activity and safeguard the one-to-one link between the Namibia dollar and the South African rand, supported by the adequate stock of international reserves.
The Monetary Policy Committee (MPC) is of the view that, as the monetary policy easing cycle progresses, the margin between the repo rates of the Bank of Namibia and the South African Reserve Bank will again narrow,” !Gawaxab said.
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