Economists predict no repo rate change

Ruusa Nandago

Economists say the repurchase (repo) rate will remain unchanged for the next three months.

This comes as the Bank of Namibia (BoN) is set to announce changes tomorrow.

The repo rate has remained unchanged for the last five meetings at 7,75%, with the current prime lending rate at 11,50%.

Ruusa Nandago, an economist at FNB, says due to the risk of capital outflows the central bank will keep the repo rate unchanged.

“We expect the repo rate to remain unchanged at 7,75% given South Africa’s decision to keep the repo rate at 8,25% in March. We do not expect repo rate cuts as of yet, as the Bank of Namibia may be weary of capital flows that could ensue if the differential is widened by more than 50 basis points,” she says.

Another economist, Josef Sheehama, says despite a decline in inflation rates, the BoN will keep repo rates the same.

“With the fundamentals of the Namibian economy remaining stable, despite all global headwinds and inflation well under control, no change in the repo rate means existing borrowers will continue paying the same instalments for various loans,” he says.

Sheehama says the energy market remains volatile, and factors such as a rise in interest rates and inflation could determine the next monetary policy committee decision.

Central bank governor Johannes !Gawaxab has said the last monetary policy decision was taken following a review of domestic, regional and global economic developments, including maintaining the currency peg with South Africa, of which the repo rate currently stands at 8,25%.

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