WINDHOEK, June 17 (Xinhua) -- Namibia's central bank on Wednesday raised its benchmark repo rate by 25 basis points to 6.75 percent due to mounting inflationary pressures despite subdued domestic economic activity.
Speaking in Windhoek, Bank of Namibia Governor Ebson Uanguta said the decision was aimed at containing inflation risks, supporting international reserves and safeguarding the one-to-one peg between the Namibian dollar and the South African rand.
According to the central bank, domestic economic activity remained weak during the first four months of 2026 compared with the same period last year.
The slowdown was most pronounced in the mining, manufacturing, tourism, electricity generation, construction and communications sectors, although agricultural output increased significantly on the back of strong crop production, Uanguta said.
Headline inflation accelerated from 2.1 percent in March to 4.1 percent in May, driven mainly by higher transport costs linked to rising global energy prices.
The central bank has projected the inflation to average 4.0 percent in 2026, up from 3.5 percent in 2025, while the economic growth is forecast to improve from 1.7 percent in 2025 to 2.6 percent this year.
Uanguta said the country's foreign reserves increased to 55.4 billion Namibian dollars (about 3.4 billion U.S. dollars) at the end of May, equivalent to about 3.5 months of import cover.
The central bank said the reserve position remains adequate to support the currency peg and meet international financial obligations.
The Bank of Namibia said it would continue to monitor inflation expectations, capital flows and broader economic developments and adjust monetary policy as necessary to maintain price stability and protect the currency peg. ■