Namibia central bank cuts main interest rate by 25 basis points

AFRICAN BUSINESS AND ECONOMYAugust 15, 2024 at 1:42 PM UTC

TLDR

Namibia's central bank cuts main interest rate by 25 basis points to 7.50% in response to lowered inflation expectations and a slowdown in inflation.
Year-on-year inflation rate at 4.6% in July and June, down from 4.9% in May; average inflation forecast for the year revised to 4.7%.
Appreciation of Namibian dollar and moderation in crude oil prices contribute to easing inflationary pressures, prompting the interest rate reduction to support economic activity.

Namibia's central bank cut its main interest rate by 25 basis points to 7.50% on Wednesday, in response to a slowdown in inflation and lowered inflation expectations.

Year-on-year inflation rate was recorded at 4.6% in both July and June, down from 4.9% in May. Reflecting these trends, the central bank revised its average inflation forecast for the year downward to 4.7%, compared to the 4.9% forecast presented at the last Monetary Policy Committee (MPC) meeting in June.

The central bank attributed this downward revision in inflation expectations to two main factors: an appreciation of the Namibian dollar and a moderation in crude oil prices.

Key Takeaways

These developments have contributed to easing inflationary pressures, enabling the central bank to lower the interest rate to support economic activity. The bank also reduced its 2024 economic growth forecast by 0.6 percentage points, bringing it down to 3.1%. This revision is partly due to the severe drought affecting the southern African region, which has hurt agricultural production and broader economic activity. The ongoing drought is one of the key factors contributing to the downward adjustment in the country's growth outlook for the year.

Namibia

Central Bank

Interest Rates

Inflation

Drought

Economy