Market expects repo rate hold

Economists are of the expectation that the central bank is expected to hold steady when it announces the repo rate later this week. The prevailing consensus suggests that the Bank of Namibia (BoN) will maintain a cautious approach, balancing domestic inflation trends against the need to preserve the currency peg with South Africa.

Standard Bank Namibia economist Helena Mboti said Namibia is expected to keep its repo rate unchanged until South Africa begins imposing rate cuts, at which point relief for the borrowing public may follow. Mboti said these views come ahead of the BoN’s decision, which will be announced tomorrow.

“The South African Reserve Bank (SARB) kept rates unchanged at the January meeting at 6.75%. Our view is that South African inflation is sufficiently contained, supported by an optimistic medium-term outlook and currency strength, giving SARB scope to frontload easing to stimulate weak gross domestic product growth,” she said.

“Given the BoN’s emphasis on narrowing the differential at the last meeting, and the current 25 basis points (bps) gap, our baseline expectation is that BoN will keep rates unchanged until SARB fully closes the differential through further cuts. Only then would BoN begin its own easing cycle. In this scenario, BoN will only deliver two 25bps cuts in tandem with South Africa’s,” Mboti said.

Simonis Storm economist Almandro Jansen also said he expected the central bank to keep the repo rate steady at 6.5%, following the decision in December last year to keep it unchanged.

“We expect the Bank of Namibia to hold the repo rate steady at 6.5% at Wednesday’s Monetary Policy Committee (MPC) meeting,” Jansen said.

Another indicator for the central bank is Namibia’s inflation rate, which remains within the target range of between 3% and 6%.

“While domestic conditions are increasingly supportive of monetary easing, the broader macro-financial environment suggests that caution will likely prevail in the near term. Namibia’s inflation rate is currently well contained at 2.9%, sitting comfortably within and even below the Bank’s 3% to 6% target range,” he said.

FirstRand Namibia economist Mandisa van Wyk said a rate cut is likely to occur later this year.

“The BoN kept the repo rate at 6.5% in December 2025 following a 25 basis points cut in October, maintaining a cautious stance to balance domestic growth pressures with external stability and the currency peg,” van Wyk said.

“With inflation contained and reserves set to benefit from a stronger currency and lower oil prices, we expect one more rate cut in the latter half of the year. Risks to the outlook include fiscal fragility, lower external demand, and any potential geopolitical developments,” she said.