The Central Bank of Namibia has decided, on Wednesday, June 18, to keep its main key rate unchanged at 6.75%. This decision was unanimously adopted by its monetary policy committee, and consequently maintains the commercial banks’ prime rates at 10.50%.
This direction aims to preserve the Namibian dollar’s peg to the South African rand, while supporting the national economic activity.
According to the Central Bank, the Namibian economy grew during the first four months of 2025, albeit at a more moderate pace than during the same period in 2024. This growth was mainly driven by the mining, tourism, commercial, transportation, and communication sectors. However, construction, agriculture, and diamond extraction showed weaker performances.
Real GDP growth forecasts stand at 3.8% for 2025 (compared to 3.7% in 2024) and 4.0% in 2026. These prospects remain subject to uncertainties, including prolonged multilateral uncertainties, trade tensions, and a decline in diamond prices.
Regarding inflation, the average annual rate slightly decreased to 3.5% in May, compared to 3.6% in April, and remains lower than the 4.9% recorded in the same period the previous year. The decline is mainly observed in the housing, transportation, and alcoholic beverages segments. The Central Bank has revised its inflation forecasts downward, now expected at 3.9% in 2025 and 4.3% in 2026, due to moderate increases in administered prices and a more favorable exchange rate.
Furthermore, private sector credit growth (PSCE) accelerated, reaching 4.5% in April compared to 3.9% in February. This improvement concerns both business and household loans. However, despite growth exceeding inflation over the past seven months, the pace of credit expansion is still considered modest.
Lastly, the monetary policy committee calls on commercial banks to gradually adjust their margins above the Repo rate, aligning them with those practiced in other member countries of the Common Monetary Zone (ZMC). An adjustment period will be granted to allow banks to adapt their operational models, with the aim of reducing costs for consumers.
