Windhoek: The Bank of Namibia (BoN) has announced an increase in the repo rate by 25 basis points, bringing it to 6.75 per cent, which in turn raises the prime lending rate to 10.25 per cent. This decision was disclosed by BoN Governor Ebson Uanguta following the Monetary Policy Committee's (MPC) third bi-monthly meeting held on 15 and 16 June.

According to Namibia Press Agency, Governor Uanguta stated that the rate hike aims to address inflation risks, bolster international reserves, and maintain exchange rate stability amidst ongoing global economic uncertainties. The governor highlighted that while economic growth was relatively strong in the United States, China, India, and South Africa during the first quarter of 2026, it remained subdued in several other key economies.

Domestically, Uanguta pointed out that headline inflation saw a significant increase from 2.1 per cent in March to 4.1 per cent in May, largely due to rising transport costs influenced by global oil market dynamics. The bank has consequently revised its inflation forecast upward, predicting an average inflation rate of 4.0 per cent in 2026, up from 3.5 per cent in 2025, with a slight easing to 3.6 per cent anticipated in 2027.

Looking ahead, the governor projected that economic growth would recover from 1.7 per cent in 2025 to 2.6 per cent in 2026. This growth is expected to be driven by robust activities in uranium mining, wholesale and retail trade, financial services, and public administration and defence sectors.

The MPC expressed ongoing concerns regarding potential inflationary pressures, including possible hikes in administered prices, exchange rate fluctuations, and any renewed escalation of tensions in the Middle East. Uanguta emphasized that the Bank of Namibia will continue to closely monitor economic data, particularly in terms of inflation expectations and capital flows, and will respond as necessary to prevent second-round effects and protect the currency peg.