The monetary policy committee lifted the repurchase rate to 7.25% from 7%. The hike was less than the South African Reserve Bank’s 50 basis-point increase last month.
Namibia’s monetary policy often tracks that of neighbouring South Africa because its currency is pegged to the rand, but they have diverged when their inflation trajectories differ. That happened in November, when Namibia increased borrowing costs by half a percentage point and South Africa by 75 basis points. Wednesday’s divergence means Namibia’s interest rate is now 50 basis points lower than South Africa’s.
The move was aimed at anchoring inflation expectations and safeguarding the nation’s peg with the rand, while avoiding harsh impulses to the domestic economy, Governor Johannes !Gawaxab told reporters in the capital, Windhoek.