Business · Southern Africa
Bank of Namibia lifts repo rate to 7% to shield the rand peg from the fuel-price shock
The unanimous 25-basis-point hike takes prime lending to 10.5%. Inflation has jumped to 5.4% on transport costs, the trade deficit has nearly doubled, and the central bank wants to narrow the rate gap with South Africa before money leaves.
CAPE TOWN — The Bank of Namibia raised its repo rate by 25 basis points to 7.00% on Wednesday, following the South African Reserve Bank in tightening policy as the oil-price shock feeds into prices. The decision by the Monetary Policy Committee, taken at its 26–27 October meeting, was unanimous and lifts the prime lending rate to 10.50%, according to the central bank’s statement.
Governor Ebson Uanguta said the stance was meant “to safeguard the one-to-one link between the Namibia Dollar and the South African Rand and mitigate against second-round effects induced by high fuel prices”. The committee also considered “the need to reduce the interest rate gap between Namibia and the anchor country to stem potential capital outflows and safeguard the stock of international reserves”, the statement says. The Namibian reported that Uanguta pointed to that gap with South Africa when announcing the move in Windhoek.
Why now
Inflation had been easing until March. It then turned: annual inflation reached 5.4% in September, which Reuters, via CNBC Africa, notes is the highest since January 2024. The bank now expects inflation to average 4.2% this year and 4.0% in 2027, both revised up on the assumption of a prolonged energy price shock. Its statement says Brent crude reached about US$116 a barrel, the highest in more than six months, because of tensions in the Middle East.
The fuel bill is also showing up in trade. Namibia’s merchandise trade deficit widened to N$33.5 billion in the first eight months of 2026, from N$17.8 billion a year earlier, as imports of mineral fuels rose. Reserves still rose to N$59.3 billion at the end of September, helped by monetary gold holdings and customer foreign-currency placements, and the bank says that is enough to support the peg.
Growth holds, just
The bank kept its growth forecast at 2.1% for 2026 and 2.8% for 2027, on recoveries in agriculture and manufacturing, but flagged the foot-and-mouth disease outbreak and possible El Niño conditions as risks. Private-sector credit growth picked up to 5.4% in August.
Namibia’s rate decisions usually follow South Africa’s, and the South African Reserve Bank raised rates last month, Reuters reported. Nedbank economists had forecast another 25-basis-point hike later this year and possibly one more in the first quarter of 2027. The next MPC meeting is on 7 and 8 December.
AB24’s Southern Africa business desk reading: the statement’s emphasis on the rate gap with South Africa signals that Windhoek is prepared to keep moving in step with Pretoria. If the Nedbank forecast is right, borrowers already paying more at the pump face a further increase in December.
Sources: Bank of Namibia MPC statement, 28 Oct 2026; The Namibian, 28 Oct 2026; Reuters via CNBC Africa, 28 Oct 2026.
— AB24 · Cape Town