Namibia Cuts Interest Rate as Inflation Slows Down

Namibia’s central bank has reduced its main interest rate by 25 basis points, moving from 7.75% to 7.50%. This decision comes in response to a slowdown in inflation and inflation expectations.

Namibia’s inflation rate held steady at 4.6% year-on-year in July, matching June’s level and decreasing from 4.9% in May.

The central bank revised its average inflation forecast for 2024 down to 4.7%, from the previous forecast of 4.9%, due to the appreciation of the Namibian dollar and a decline in crude oil prices.

Central bank Governor Johannes !Gawaxab stated that with inflation and inflation expectations decreasing while nominal interest rates remained unchanged, real interest rates have effectively tightened. 

This economic shift prompted the Monetary Policy Committee (MPC) to consider a moderate easing of monetary policy.

Additionally, the central bank has downgraded its 2024 economic growth forecast by 0.6 percentage points to 3.1%, partly due to the severe drought affecting the southern African region.

Source: CNBC AFRICA