The Monetary Policy Committee (MPC) has decided to maintain the Repo rate at 6.5%, Bank of Namibia Governor Johannes !Gawaxab announced following the latest meeting.

Consequently, local commercial banks are expected to keep their prime lending rates at 10.125%.

“This policy stance is deemed appropriate for safeguarding the one-to-one link between the Namibia Dollar and the South African Rand, while remaining supportive of domestic economic activity,” he said.

!Gawaxab said in determining the appropriate monetary policy stance, the Committee noted the prolonged global policy uncertainty and potential risks to the domestic economy.

“Furthermore, the formal adoption of the 35% inflation target by South Africa necessitates additional vigilance by the Namibian authorities in managing domestic inflation to ensure the continued smooth functioning of the exchange rate peg,” !Gawaxab said.

Despite a deceleration in the pace of domestic economic activity !Gawaxab said the overall environment remains positive, with both current and projected inflation well-contained and growth set to recover in the medium term.

“While capital flows were assessed to be orderly and the MPC was gratified by the smooth redemption of the Eurobond, narrowing the interest rate differential with South Africa was equally deemed essential,” he said.

The normalisation of the prime-repo rate spread, anticipated by the end of the year, is expected to provide further support to the domestic economy, bringing the level of the prime rate to 10.00% he concluded.