… Bank of Namibia tightens policy amid inflation pressures
By Sostenus Wilherm
The Bank of Namibia has increased the repo rate by 25 basis points to 6.75 percent, in a decisive move aimed at containing rising inflationary pressures. This will stabilise the domestic economy, and safeguard the long-standing currency peg between the Namibia Dollar and the South African Rand.
The decision was announced following the Monetary Policy Committee (MPC) meeting held on 15 and 16 June 2026, where members reviewed global economic developments, domestic performance indicators, and evolving inflation risks before agreeing on a tighter monetary policy stance.
Bank of Namibia governor Ebson Uanguta said the decision reflects the need to balance weak domestic growth with increasing inflationary pressures and external uncertainties.
“The committee, after extensive deliberations, decided to raise the repo rate by 25 basis points to 6.75 percent. This action is necessary to mitigate inflation risks, support the level of international reserves, and safeguard the one-to-one link between the Namibia Dollar and the South African Rand,” Uanguta stated.
He further emphasised that the central bank remains committed to maintaining macroeconomic stability despite challenging global conditions, including persistent geopolitical tensions, fluctuating commodity prices, and tightening monetary policy across major economies.
Global economic growth remains uneven, with stronger performance in economies such as the United States, China, India, and South Africa, while other regions continue to experience subdued expansion.
Inflationary pressures have also intensified globally, prompting central banks, including the South African Reserve Bank and the European Central Bank, to raise interest rates in response.
Commodity markets have reflected mixed signals. Gold prices have declined due to a stronger US dollar and expectations of higher interest rates, while industrial metals such as copper and zinc have gained on strong demand. Uranium prices remain relatively firm. Diamond prices continue to face downward pressure due to competition from lab-grown alternatives.
Oil prices have recently eased to around N$1,500 per barrel following a temporary ceasefire agreement between the United States and Iran. However, the bank warned that energy markets remain vulnerable, and any disruption could quickly translate into higher domestic trans- port and fuel costs.
Namibia’s economy continues to show signs of weakness, particularly in mining, manufacturing, tourism, construction, and communications. Despite this, the agriculture sector recorded strong performance, supported by favourable crop production conditions. Overall economic growth is projected to recover to 2.6 percent in 2026, compared to 1.7 percent in 2025, although risks remain tilted to the downside.
Inflation has risen sharply in recent months, increasing from 2.1 percent in March 2026 to 4.1 percent in May 2026, largely driven by transport and fuel prices. The bank has revised its inflation forecast upward, projecting an average of 4.0 percent in 2026 before easing to 3.6 percent in 2027.
Private Sector Credit Extension (PSCE) has shown only modest improvement, growing by 4.8 percent year-on-year in April 2026, reflecting subdued business investment and cautious household borrowing.
Meanwhile, the trade deficit widened to N$11.7 billion in the first four months of 2026, driven by increased imports of machinery, fuel, and vehicles.
Despite these pressures, Namibia’s international reserves improved to N$55.4 billion in May 2026, providing an import cover of 3.5 months— considered sufficient to maintain the currency peg and meet external obligations.
Uanguta said: “The Bank of Namibia will act decisively where necessary to contain second-round inflation effects and ensure the stability of the financial system while preserving the integrity of the currency peg.”
