Analysts react to unchanged repo rate

February 14, 2018, 5:38pm

The monetary policy committee has kept the repo rate unchanged at 6.75% and analysts are conflicted whether this spells well for business and the household amidst declining credit.

“This level is deemed appropriate to continue supporting domestic economic growth while maintaining the one-to-one link between the Namibian dollar and the South African rand,” said the central bank governor, Iipumbu Shiimi.

While the bank did exactly what is warranted and was expected given the current economic environment, Cirrus Capital senior analyst Dylan van Wyk says he does not believe that a 25 basis points cut in the repo rate will do much to stimulate credit extension.

“The problem is more to do with low consumer and business confidence due to low growth expectations. These problems cannot generally be addressed using monetary policy (especially when it is not harmonized with expansive fiscal policy),” he says. 

Should the repo rate be cut, the banks’ prime lending rate which is based on the repo rate, will also decline, Van Wyk reasons.