Repo rate increases by 25 basis points
17 Jun 2015 16:40pm
WINDHOEK, 17 APR (NAMPA) The central bank has increased the repo rate by 25 basis points from 6.25 per cent to 6.50 per cent in response to Namibias hunger for luxury goods.
Bank of Namibia (BoN) Governor Ipumbu Shiimi said made this announcement during a media briefing here on Wednesday, following a BoN Monetary Policy Committee (MPC) meeting held on Tuesday this week.
Repo rate refers to the rate at which the central bank lends money to commercial banks such as First National Bank (FNB) of Namibia, Standard Bank Namibia, Bank Windhoek and Nedbank Namibia in the event of any shortfall of funds.
Shiimi said the decision was taken to contain the high growth in household credit, particularly that of instalment credit.
He said the MPC noted that a large portion of these loans continue to be primarily used to finance unproductive and imported luxury goods, which puts additional pressure on the international reserves of the country.
With this increase in the repo rate, the expectation is that deposit-taking institutions will also increase deposit interest rates by the same margin, thereby encouraging saving, said the BoN chief.