Namibia Holds Rate at 6.5% as Iran War Clouds Growth, Inflation Outlook

The Bank of Namibia has retained its benchmark interest rate at 6.50 per cent, citing mounting risks to economic growth and inflation arising from the spillover effects of the ongoing Iran war, marking the third consecutive it has left its repo rate unchanged, as policymakers weigh external shocks against domestic price stability.

Namibia’s central bank governor, Ebson Uanguta, at a press conference on Wednesday said the inflation outlook remains fragile despite recent moderation in headline figures.

Annual inflation eased to 2.1 per cent in March, down from 2.4 per cent in February, representing its lowest level since 2020.

However, the central bank warned that price pressures are likely to resurface in the coming months.

“Risks to the domestic inflation outlook remain tilted to the upside, notably through potential increases in administered prices, exchange rate volatility, and the spillover effects of the prolonged war in the Middle East,” Uanguta stated.

Reflecting these concerns, the bank revised its inflation projection upward, forecasting an average rate of 3.7 per cent for 2026, slightly above the 3.5 per cent estimate issued at its February policy meeting.
In response to surging global energy prices triggered by the conflict, the Namibian government has moved to cushion households by cutting fuel levies by 50 per cent for a three-month period ending in June.
Meanwhile, the central bank has also downgraded its growth outlook for this year and next, pointing to weaker-than-expected performance in key primary sectors, particularly metals and diamond mining, which remain critical to the country’s export earnings.
Namibia’s monetary policy stance continues to be closely aligned with that of neighbouring South Africa, given the one-to-one peg between their currencies and strong economic linkages.
At its last policy meeting, the South African Reserve Bank similarly held its benchmark interest rate steady at 6.75 per cent, reinforcing a cautious regional response to global uncertainties.