The Bank of Namibia raised its benchmark interest rate for the second time this year to help curb surging credit demand.
The repurchase rate was increased by a quarter of a percentage point to 6 percent, Governor Ipumbu Shiimi told reporters today in the capital, Windhoek. Consumer debt is estimated at about 87 percent of income, while credit demand by households and businesses climbed 15.4 percent in June from a year ago, according to the central bank.
“Strong growth in household credit remains a concern, especially when used to finance unproductive imported luxury goods,” Shiimi said. Rising imports have put pressure on foreign-currency reserves, he said.
Namibia pegs its currency to South Africa’s rand and generally follows monetary policy set by policy makers in the neighboring country. The South African Reserve Bank raised its benchmark interest rate by 25 basis points to 5.75 percent last month.
While the key objective of the Bank of Namibia is to maintain parity between the Namibian currency and the rand, the Monetary Policy Committee also monitors domestic inflation. Growth in consumer prices, which eased to 5.6 percent in July from 6.1 percent in the previous month, will probably average 6 percent this year, Shiimi said.
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