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Repo rate reduced to 4.25 percent
During a special meeting held on 15 April, the Monetary Policy Committee (MPC) of the Bank of Namibia decided to cut the Repo rate with another 100 basis points to 4.25%. Said decision comes just hours after the South African Reserve Bank also cut the country’s benchmark interest rate by 100 basis points to 4.25% per annum.
Repo rate reduced to 4.25 percent
Since the previous MPC meeting where the Repo rate was decreased from 6.25% to 5.25% on 20 March, inflation rates in most key monitored economies further declined while monetary policy stances became even more accommodative. The global economy is projected to contract by 3.0% in 2020, much worse than the 0.1% negative growth during the 2008/2009 global financial crises.
The projected contraction is mainly on the back of the COVID-19 pandemic which has caused severe economic disruptions. In the Advanced Economies (AE’s), the growth is projected to contract by 6.1% in 2020, while the Emerging Markets and Developing Economies (EMDEs) are projected to contract by 1.0% in 2020. The global outlook and extent of supply disruptions remain uncertain as a result of the pandemic.
On 31 March 2020, the stock of international reserves stood at N$33 billion, from N$32.2 billion reported in the previous MPC statement. This amount of international reserves is estimated to cover 5.3 months of imports of goods and services. At this level, reserves are sufficient to protect the peg of the Namibian Dollar to the South African Rand and meet the country’s international financial obligation.
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