Namibia Raises Interest Rates
The Bank of Namibia will announce increased interest rates today.
Namibia’s current interest rate is 4% and will likely increase to 4.50% in response to record levels of inflation tied to price increases in the transportation, fuel and food sectors.
Recently, Namibia has seen an upward trend in interest rates this year, in line with South African monetary policy. Namibia’s heavy reliance on its mining industry makes it vulnerable to external shocks. Coupling its currency to the Rand provides the Namibian economy some stability but also forces the country to imitate South African monetary policies. During the height of the pandemic, Namibia followed Johannesburg by maintaining interest rates at 3.75%. In February, however, Namibia increased its benchmark interest rate for the first time since April 2016 by 25 points to the current rate of 4%, in alignment with South Africa.
Higher interest rates may be an indication of a return to relative economic normalcy in the region as the Bank of Namibia has predicted 3.4% GDP growth for 2022. For its monetary policy, Namibia will likely continue to mirror South African monetary policy in the near-term, or until a time that is able to return to pre-pandemic levels.
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