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Namibia central bank holds main rate as inflation ticks higher

By Thomson Reuters Jun 19, 2024 | 4:39 AM

By Nyasha Nyaungwa

WINDHOEK (Reuters) -Namibia’s central bank kept its main interest rate unchanged on Wednesday, responding to a slight uptick in inflation and protecting the local currency’s peg to the South African rand.

The repo rate has been at 7.75% since June 2023. Consumer inflation edged up to 4.9% in annual terms in May from 4.8% in April and 4.5% in March.

“The MPC (Monetary Policy Committee) was wary of the recent deterioration in inflation, which could jeopardise the progress that has been made over the past year in containing inflation and safeguarding price stability,” Bank of Namibia Governor Johannes !Gawaxab said in a statement.

He said risks to the domestic economic outlook persisted due to factors including drought and falling diamond prices on the international market.

Namibia is a major diamond producer and has significant deposits of lithium and rare earth minerals used in electric vehicles and wind turbines.

The central bank sees inflation averaging 4.9% this year, unchanged from its last MPC meeting in April.

(Writing by Tannur Anders and Bhargav AcharyaEditing by Alexander Winning and Peter Graff)