Banks announce Christmas present

TWO of Namibia’s largest banks announced interest rate cuts yesterday after the Bank of Namibia (BoN) said the repo rate will decrease from 6,75 per cent to 6 per cent today – the lowest ever in independent Namibia.

The BoN’s announcement that the rate at which it lends money to the commercial banks will be lowered has resulted in Bank Windhoek and First National Bank (FNB) cutting their interest rates.Bank Windhoek in fact cut its prime lending rate and mortgage lending rate yesterday already. The prime rate was reduced by 75 basis points from 10,5% to 9,75%, whilst the mortgage lending rate is down to 10,75% from 11,5%.From Monday, FNB’s interest rates will also be slashed by 75 basis points and will be the same as those of Bank Windhoek, spokesperson Dawn Humphries said yesterday.NedBank acting managing director Debbie Smit said the bank’s executive committee will meet today to decide whether they will also adjust their interest rates.Earlier this year, the BoN caused uproar in the banking sector when it called on commercial banks to bring down their prime lending rates to reduce the gap between them and the repo rate. Making the announcement yesterday, BoN Governor Ipumbu Shiimi said they are ‘of the view that a further round of monetary easing is justified to mitigate the weaknesses in the real sector and boost growth on the demand side’.He said as result of the inflation rate rising from 3,2 per cent in October to 3,4 per cent in November – a ‘subdued inflationary environment for the short to medium term’ – further space was provided for monetary easing.According to Shiimi, the slight increase in inflation is ‘not a worrying development’.He singled out the mining sector as the largest contributor to ‘the robust performance witnessed in the primary industry’.