BoN repo rate remains unchanged
19 Oct 2016 14:10pm
WINDHOEK, 19 OCT (NAMPA) - The central bank has kept the repo rate unchanged at 7 per cent to support growth and maintain the one-to-one link of the Namibian Dollar to the South African Rand.
The repo rate refers to the rate at which the central bank lends money to commercial banks such as First National Bank (FNB) Namibia, Standard Bank Namibia, Bank Windhoek and Nedbank Namibia in the event of any shortfall of funds.
Speaking during a media briefing here on Wednesday, Bank of Namibia (BoN) Governor Ipumbu Shiimi said the decision was taken during the last Monetary Policy Committee (MPC) meeting held on Tuesday.
The decision was taken following a review of the global, regional and domestic conditions, as well as the financial developments since the last meeting held in August.
The BoN repo rate has been at 7 per cent since April 2016 following a hike of 25 basis points in response to the South African Reserve Bank also raising its repo rate, also to 7 per cent.
Shiimi stressed that Namibia has to re-align its interest rate with that of South Africa in order to keep money in the country.
He said the moment money starts to flow out of the country there will be pressure on the country's foreign reserves.
The governor explained that if the BoNs repo rate is less than that of the South African central bank, investors would rather invest there.
Thus, he said it is wise to keep the country's repo rate in the same range as that of South Africa.
Namibian commercial banks' prime lending rate stands at 10,75 per cent while the mortgage lending rate is 11,75 per cent.