The Bank of Namibia has once again opted to keep its main interest rate steady at 6.75%, marking the second consecutive meeting without a change to the repo rate. The decision, announced after the Monetary Policy Committee’s (MPC) bi-monthly meeting held on 16–17 June 2025, reflects the central bank’s cautious approach amid persistent global uncertainties and a still-recovering domestic economy.
Why was the rate held steady?
The central bank made it clear that its priority remains safeguarding the 1:1 peg between the Namibian Dollar and the South African Rand, a key pillar of Namibia’s monetary framework. In doing so, the MPC also aims to support moderate economic growth while containing inflation.
By maintaining the interest rate, Namibia’s monetary stance stays aligned with broader regional dynamics while keeping capital flows stable, particularly important given that South Africa recently cut its repo rate by 25 basis points to 7.25%.
“The MPC was wary of the prevailing uncertainty from fundamental global economic and trade policy shifts,” the Bank of Namibia noted. “The escalating Middle East conflict and its potential ramifications for global inflation and growth could not be overlooked.”
Economic backdrop: modest growth, contained inflation
The MPC’s decision follows a thorough review of domestic, regional, and global economic conditions. According to the central bank:
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Economic activity expanded during the first four months of 2025, albeit at a slower pace compared to the same period last year. The mining, tourism, wholesale and retail trade, and transport sectors provided much of the momentum, while construction, agriculture, and the diamond subsector remained subdued.
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Real GDP growth is projected to increase slightly, from 3.7% in 2024 to 3.8% in 2025 and 4.0% in 2026. However, several downside risks could temper this outlook, including international trade tensions, weak diamond prices, geopolitical instability, local water shortages, and delays in government infrastructure spending.
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Inflation edged down to 3.5% in May from 3.6% in April, and the central bank has revised its inflation forecast downward to 3.9% for 2025 and 4.3% for 2026. This reflects lower-than-expected increases in administered prices and a stronger exchange rate.
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Private Sector Credit Extension (PSCE) has continued to rise modestly, though it remains subdued, suggesting ongoing caution in consumer and business borrowing.
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International reserves remain healthy, covering approximately 3.7 months of imports, deemed sufficient to uphold the currency peg and meet external financial commitments.
Walking a tightrope between growth and stability
The Bank of Namibia’s decision to maintain the repo rate highlights the delicate balancing act facing many central banks in emerging markets. While there is an ongoing need to support domestic growth, the uncertainty of global trade and monetary policies—along with geopolitical risks—requires a prudent, watchful approach.
What does this mean for you?
For Namibians, the unchanged interest rate means:
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Borrowers will continue to face the same cost of credit, which can support planning and financial stability.
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Homeowners and potential buyers may find reassurance in stable mortgage rates for now.
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Investors and savers can anticipate continued yield stability on interest-bearing assets, though future shifts will depend on both domestic economic performance and external shocks.
Now more than ever, homeowners and potential buyers are urged to remain in control of their financial health by maintaining a good credit score and adopting smart financial habits.
If you already have a home loan, the interest payable is included in your monthly repayment. Most banks offer a repayment structure where the first few years of the loan are primarily spent paying off interest, with only a fraction going toward the principal (the amount borrowed to buy the house). This is a key factor to keep in mind when managing your finances as a homeowner.
If you still planning on applying for a home loan the best thing to do is start out your journey with the best possible rate for you. Here are some tips to ensure you get the best loan for your budget:
Improve Your Credit Score
Banks consider numerous factors when assessing your eligibility for a home loan. One of the most critical factors is your credit score. This score reflects your financial discipline and repayment history. A good credit score often leads to more favourable interest rates, making homeownership more affordable. Conversely, a poor credit score can result in a higher interest rate or even lead to the rejection of your home loan application. To boost your credit score, maintain a consistent record of timely bill payments and responsible financial behavior.
Opt to get prequalified to see what you might possibly be able to qualify for and to identify any problems before you apply for a home loan.
Outlook
Looking ahead, the central bank’s next moves will likely hinge on evolving inflation trends, economic growth momentum, and decisions by South Africa’s Reserve Bank. While the door is open to further rate adjustments, any such move will be made with careful consideration of both local realities and global developments.
For now, the message is clear: stability remains the cornerstone of Namibia’s monetary policy approach in an increasingly unpredictable world.
