Namibia's Central Bank Keeps Its Benchmark Interest Rate Unchanged at 7%

Namibia’s central bank left its benchmark interest rate unchanged for a seventh consecutive meeting as the economy’s recovery starts to gain momentum and electricity costs threaten to boost inflation.

The repurchase rate was kept at 7 percent, Bank of Namibia Governor Ipumbu Shiimi told reporters today in the capital, Windhoek. The bank cut the rate four times in 2009 to spur economic growth.

“Available indicators for the real sector showed continued improvement since the last executive committee meeting and are expected to perform positively going forward,” Shiimi said.

Namibia’s diamond output more than doubled in the first quarter, the central bank said on June 22, while uranium and gold production also increased. That may help to spur economic growth to 1.7 percent this year, compared with a contraction of 0.7 percent in 2009, according to the International Monetary Fund. Namibia is the world’s biggest miner of offshore diamonds.

Shiimi said mining and agricultural output continued to recover, while other sectors also gained on increased demand from abroad, low inflation, renewed domestic demand and higher commodity prices.

The inflation rate increased for the first time in seven months in July, rising to 4.6 percent from 4.3 percent in the previous month, the statistics office said on Aug. 16. Price pressures may build as electricity costs jump 18 percent this year.

Namibia’s currency is pegged to the South African rand and the central bank generally follows monetary policy set by its neighbor, Africa’s biggest economy. The South African Reserve Bank left its benchmark interest rate unchanged at 6.5 percent on July 22, after reducing it seven times since December 2008.

To contact the reporters on this story: Chamwe Kaira in Windhoek via Johannesburg at pmrichardson@bloomberg.net; Nasreen Seria in Johannesburg at nseria@bloomberg.net.

• Tweet
• More
  • Business Exchange
  • Buzz up!
  • Digg
• Print
• Email