14 Aug 2019 16:00pm
WINDHOEK, 14 AUG (NAMPA) The Monetary Policy Committee of the Bank of Namibia (BoN) has cut the repo rate by 25 basis points from 6,75 to 6,50 per cent.
Briefing the media here on Wednesday, BoN Governor Iipumbu Shiimi said the committee took the decision in order to support domestic economic activity and to maintain the one-to-one link between the Namibian Dollar and South African Rand.
The repo rate is the cost at which the central bank lends money to commercial banks and an increase or decrease in the rate is most likely to affect the interest rate that commercial banks charge consumers.
Domestic economic activity slowed during the first six months of 2019, compared to the corresponding period of 2018, Shiimi said, adding that the slowdown was reflected in sectors such as mining, construction, electricity, wholesale and retail trade.
He went on to say private sector credit extension growth rose slightly during the first six months and the stock of international reserves remained sufficient to support the currency peg.
The governor further noted that the global economic growth continued to moderate during the first quarter of 2019, mainly due to lower growth observed in the Emerging Markets and Developing Economies (EMDEs).
He added that growth in the global economy is projected to slow down further to 3,2 per cent in 2019 from 3,6 per cent in 2018 as reflected in weaker leading economic indicators.
Shiimi also noted that the gross domestic product growth for the EMDEs is projected to continue moderating to 4,1 per cent in 2019 from 4,5 per cent in 2018.
Key risks to the global outlook remain, amongst others, escalating trade and geopolitical tensions and higher policy uncertainty across many countries, including Brexit, he said.
Shiimi also said the average inflation rate declined to 4,4 per cent during the first six months of 2019 from its highest level of 5,6 per cent observed in November 2018. The moderation was mainly due to a decline in housing inflation.
On a monthly basis, inflation declined to 3,9 per cent in June 2019 from 4,1 per cent reported in May 2019. Overall inflation is projected to average 4,3 per cent in 2019, he added.