17 Aug 2016 17:50pm
WINDHOEK, 17 AUG (NAMPA) - The Bank of Namibia (BoN) has maintained the Repo rate at 7 per cent, its Deputy Governor Ebson Uanguta said at a media conference on Wednesday.
This comes after a review of the global, regional, and domestic economic trends.
He said the overall monetary policy stance remained unchanged in both the advanced and emerging market economies (EMEs) due to various factors, such as a slowdown in the growth of larger economies, which leads to low commodity prices on the global market, higher exchange rates and higher inflation rates for developing economies.
The annualised Growth Domestic Product (GDP) growth rates of the United States [of America] and the Eurozone moderated during the second quarter of 2016 when compared to the previous year. On an annual basis, the Japanese economic growth slowed to near zero, compared to a marginal expansion in the previous quarter.
The 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.
Uanguta noted that as a result, the Namibian economy suffered severely, resulting in high inflation, which now stands at 6,7 per cent compared to 3,4 per cent last year.
This, he attributed to the increasing demand of food, non-alcoholic beverages, housing, water, electricity, gas and transport as the main contributors.
Going forward, annual inflation is projected to increase, but remain within acceptable levels for the remainder of the year.
Growth in the Private Sector Credit Extension thus slowed down to lower demands for both households and the corporate sector, Uanguta said, which means fewer companies and households are applying for credit at banks and therefore borrowing less money.
Uanguta also raised concern on the prevailing drought in Namibia, which has resulted in the re-allocation of finances from Government through the Drought Relief Food Programme.
However, he said that the BoN projects the domestic economy to grow by at least 4 per cent, despite the uncertain global economic trends.