Economists predict repo rate to remain unchanged

Economists predict that the repo rate will remain unchanged at 7,75%.

The Bank of Namibia’s Monetary Policy Committee (MPC) is set to announce interest rates today.

The current repo rate of 7,75% is the highest it has been in the past 14 years.

The MPC decided to keep rates unchanged at their last meeting in August 2023. That was the second unchanged rate.

Economist Salomo Hei says he expects the interest rate pause to persist in the short term.

“This is with possible cuts in the late first half of 2024 to continue protecting the currency peg and to control inflation for price stability,” he said.

Hei noted that looking at inflation in South Africa and Namibia, the most rational thing for both central banks to do is to keep interest rates unchanged as a measure to stimulate spending and investment, supporting economic growth.

“Currently, inflation in Namibian stands at 5,4% from 4,7% recorded in August 2023. Inflation is mainly driven by food and non-alcoholic beverages and transport. Core inflation in South Africa fell to 4,5% from 4,8%.”

The South Africa Reserve Bank kept its repo rate unchanged at 8,25% in its last meeting held in September 2023. This results in a spread of 50 basis points between the two countries’ repo rates.

Ministry of Mines and Energy economist Abednego Ekandjo said the repo rate is most likely to remain unchanged due to the peg between Namibia and South Africa.

He said if increased, borrowing will become more expensive for the general public and they will have to pay more for the same products and services. -shania@namibian.com.na