Bank of Namibia retains 6.50% price at first 2026 assembly

The Bank of Namibia has retained its benchmark coverage price at 6.50% at its first financial coverage assembly of 2026, signalling a cautious stance regardless of moderating inflation and evolving regional financial traits.

The choice was introduced following the Financial Coverage Committee assembly chaired by the central bank’s new governor, Ebson Uanguta.

It marks a continuation of the maintain place adopted in December, as policymakers weigh easing home worth pressures towards regional dangers and exterior coverage indicators, significantly from South Africa.

What the information is saying 

Namibia’s newest inflation figures present a gradual easing in headline worth development, however underlying pressures stay evident. The central bank mentioned this stability knowledgeable its determination to maintain charges unchanged for now.

• Based on the Namibia Statistics Company, annual headline inflation slowed to 2.9% in January, in comparison with 3.2% in the identical interval final yr.
• Core inflation, which excludes unstable parts similar to meals and vitality, stood at 3.2%, barely above the headline determine.
• The divergence between headline and core inflation means that whereas general worth pressures are easing, underlying inflationary traits haven’t totally subsided.

The central bank’s determination displays a desire to attend for clearer indicators that inflationary pressures are sustainably anchored earlier than contemplating any coverage easing.

Rise up to hurry 

Namibia’s financial coverage framework is carefully aligned with that of South Africa as a result of one-to-one peg between the Namibian greenback and the South African rand. This long-standing foreign money association has vital implications for home rate of interest choices.

• The peg requires Namibia to take care of coverage settings broadly aligned with these of the South African Reserve Bank to protect foreign money stability.
• Deep commerce and monetary linkages between the 2 economies amplify the influence of South African financial coverage shifts on Namibia.
• Namibian authorities have beforehand famous that South Africa’s decrease inflation goal framework necessitates cautious home alignment to keep away from change price and worth instability.

Because of this, even when home inflation moderates, Namibia should think about exterior financial circumstances earlier than adjusting its benchmark price.

Extra Insights 

Regional financial developments are reinforcing the cautious tone adopted by policymakers in Windhoek. Inflation traits in neighbouring nations are shaping expectations throughout Southern Africa.

These regional dynamics spotlight a broader sample of central banks choosing coverage stability as they assess the sturdiness of disinflation traits.

What it is best to know 

Consideration can be turning to West Africa, the place financial coverage choices proceed to affect investor sentiment throughout the continent.

Nigeria is sustaining a decent stance because it confronts inflationary pressures and change price challenges.

Whereas Namibia’s inflation has moderated, policymakers seem unwilling to maneuver forward of regional friends, reinforcing a measured method that prioritises foreign money stability and coverage coordination over early easing.