The central bank of Namibia has cut its key interest rate for the fourth consecutive month, saying inflation remains subdued and there is room to support the economy.
The Bank of Namibia cut the repo rate by 25 basis points to 6.75 per cent after making cuts of the same amount at the previous three monetary policy meetings.
The Southern African country’s annual inflation rate fell to 3.2 per cent in January from 3.4 per cent in December. Inflation is expected to average 4.0 per cent this year, the central bank said in a statement on Wednesday.
Other reasons for the repo rate cut include relatively high domestic real interest rates and ample foreign exchange reserves. The bank expects economic growth of 4.0% in 2025, up from 3.5% last year, but said global trade restrictions pose growing risks to the economic outlook.
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“We need to keep a close eye on the trade war and how it affects the Namibian economy,” said Bank of Namibia Governor Johannes Gawashab.
Namibia’s economy is closely tied to that of neighbouring South Africa, with its currency pegged 1:1 to the rand.
Gawashab said South African-US relations under President Donald Trump would have a major impact on Namibia.
Last week, President Trump signed an executive order cutting off US financial assistance to South Africa over its land policies and ally Israel’s genocide trial at the International Court of Justice.
South Africa defended itself by arguing that the order “lacks factual accuracy and fails to acknowledge South Africa’s deep and painful history of colonialism and apartheid.”
