BoN keeps repo rate unchanged

19 Aug 2015 14:40pm
WINDHOEK, 19 AUG (NAMPA) – The Namibian central bank has decided to keep the repo rate unchanged at 6,50 per cent while assessing the impact of the last Monetary Policy Committee (MPC) decision that was partially based on high rates of instalment credit for households.
Bank of Namibia (BoN) Governor, Iipumbu Shiimi revealed this during a media briefing on Wednesday, saying the BoN MPC decided to maintain the repo rate at 6,50 per cent for the next two months until the next meeting of the MPC that will be held on 20 October this year.
He, however, indicated that the MPC remains concerned about the high growth in instalment credit extended to households, despite the slowdown observed in the last few months.
“A considerable amount of these loans is still largely used to finance unproductive imported luxury goods, hence putting additional pressure on the international reserves of the country,” emphasised the governor.
Meanwhile, Shiimi indicated that key indicators in the domestic economy displayed positive developments during the first six months of 2015.
On inflation, he said, Namibia's annual inflation rate declined during the first six months of 2015 and is expected to remain manageable for the rest of the year.
The average inflation over the period under review slowed to 3,4 per cent from 5,6 per cent during the corresponding period of 2014.
This trend continued as reflected in the latest figure of 3.3 per cent for the month of July 2015. “The decline in inflation was predominantly reflected in the categories of transport, housing, water, electricity, gas and food as well as non-alcoholic beverages,” explained the governor.
Shiimi further stated that the primary drivers behind the improved domestic economy over the review period were robust construction activities in the public and private sector, as well as wholesale and retail trade.
Going forward, he pointed out that the Namibian economy is expected to grow by 5,0 per cent during the course of 2015, up from 4,5 per cent in the preceding year (2014).
He explained that risks to the domestic economy's growth remain the slow recovery in the economies of the country's trading partners, low commodity prices and the adverse weather conditions.
In addition, he said, Namibia's Private Sector Credit Extension (PSCE0) continued to be strong, although it declined in June this year, driven mainly by businesses.
According to Shiimi, the PSCE grew by 16,0 per cent over first six month compared to the average of 15,3 per cent over the same period in 2014.
In June 2015, the annual growth in PSCE, however, slowed to 14,7 per cent from 16,1 per cent in the previous month.