Some relief as banks release new interest rates

Windhoek-In reaction to the decrease in the policy rate by the Monetary Policy Committee of the Bank of Namibia, Bank Windhoek and Standard Bank Namibia have decreased their prime lending rates by 0.25 percent from 10.75 percent to 10.50 percent.

The mortgage lending rates at both banks will decrease from 11.75 percent to 11.50 percent and all changes will be effective from today.

The other two commercial banks, First National Bank and Nedbank, are expected to follow with similar announcements.

According to Claire Hobbs, the chief treasurer at Bank Windhoek, the repo rate reduction was expected after the South African Reserve Bank lowered rates in South Africa last month.

Rates were decreased to maintain the currency peg against the South African rand and support the local economy. The Monetary Policy Committee was mindful that to support a weakened economy, it had to drop its repo rate to commercial banks, Hobbs said.

Vehicle and asset finance rates will continue to be linked to the prime lending rate and will be re-priced accordingly.

According to Claudia Boamah, an economic analyst at Capricorn Asset Management, relief has finally been granted to the Namibian economy, which has struggled over the last year within the tight policy environment.

The dire condition of the domestic economy as evinced by the recession, falling inflation, high unemployment and weak credit growth has long since necessitated rate cuts. However, the central bank also had to keep in mind the protection of the Namibian dollar's link to the rand. Fortunately, recent data on the level of our international reserves indicate that the peg can be sustained for almost half a year thanks to injections from the National Bank of Angola and the AfDB loan, said Boamah yesterday in The Morning Brief, which is her daily assessment of the economy.

Source: New Era Newspaper Namibia