Windhoek – The Bank of Namibia (BoN) has kept the repo rate unchanged at 6.75 per cent. The decision was taken after a review of global, regional and domestic economic and financial developments.
BoN Governor Ipumbu Shiimi said during the first Monetary Policy announcement for 2018 here on Wednesday, the repo rate at this level remains appropriate to support and maintain the one-to-one link between the Namibian Dollar and South African Rand.
He said the central bank also deemed it appropriate to continue supporting domestic economic growth.
The repo rate is the cost at which the central bank lends money to commercial banks and an increase or decrease in that rate is most likely to affect the interest rate that commercial banks charge consumers.
Meanwhile, the average annual private sector credit extension (PSCE) slowed significantly in 2017.
The PSCE stood at 6.6 per cent in 2017, lower than the 11.4 per cent recorded in 2016.
Shiimi said the slower growth in PSCE was due to reduced growth in credit advanced to both the household and corporate sectors.
This was especially in the form of mortgage and instalment credit.
Growth in the PSCE also moderated further to 5.1 per cent at the end of December 2017, from 5.2 per cent in October the same year.
Meanwhile, the domestic economy is expected to start recovering in 2018, after a weak performance in 2017 mainly attributed to a decline in the construction, wholesale and retail trade sectors.
This was coupled with slower growth in manufacturing, electricity and water, as well as transport and communication.
Other key sectors such as mining, agriculture and tourism improved and contributed positively to economic growth.
Annual inflation averaged around 6.2 per cent in 2017 compared to 6.7 per cent the previous year.
The moderation was mainly due to a significant decline in inflation for food and non-alcoholic beverages during 2017, while inflation for the housing and transport categories accelerated.
The inflation rate however remained constant at 5.2 per cent during December 2017, but is expected to average around five per cent for 2018. – NAMPA