Namibia’s central bank has raised its benchmark interest rate by 25 basis points to 6.75%, marking its first rate increase in three years, while also revising its 2026 inflation forecast upward amid rising global energy costs.
The decision was announced by the Bank of Namibia following its Monetary Policy Committee (MPC) meeting on Wednesday.
The apex bank stated that policy was warranted given subdued domestic economic activity and sluggish credit extension
What the central bank is saying
The Bank of Namibia said the decision reflects growing concerns over both domestic and global inflation risks.
- “The Monetary Policy Committee noted rising global and domestic inflationary pressures over the near term, despite the ensuing peace agreement between the United States and Iran,” the central bank stated.
The MPC added that a moderate policy tightening was appropriate given subdued economic activity and weak credit growth.
- According to the bank, domestic economic conditions remained soft during the first four months of the year, while private sector credit extension showed only marginal improvement.
The apex bank noted that inflationary pressures have intensified since its previous policy meeting.
Annual inflation in Namibia accelerated to 4.1% in May 2026, up from 3.1% in April, despite government measures to cushion consumers from rising global fuel prices through lower fuel levies.
Inflation outlook revised higher
The central bank also raised its inflation outlook for the year, citing higher energy and food prices.
- The Bank of Namibia now expects inflation to average 4.0% in 2026, compared with its earlier forecast of 3.7% issued in April.
It noted that inflation has risen across several monitored economies due to energy price shocks and supply chain disruptions.
- South Africa’s inflation increased from 3.1% in March 2026 to 4.0% in April 2026, adding to regional price pressures.
The bank also referenced International Monetary Fund projections indicating that global inflation could rise from 4.1% in 2025 to 4.4% in 2026 before easing to 3.7% in 2027.
The central bank said elevated energy and food costs are expected to remain key drivers of inflation over the near term.
Regional monetary policy trend
Namibia’s monetary policy is closely linked to that of neighbouring South Africa because the Namibian dollar is pegged one-to-one with the South African rand.
Last month, the South African Reserve Bank raised interest rates for the first time in three years, reflecting similar concerns about inflationary pressures across the region.
The Bank of Namibia’s latest move is expected to help preserve the currency peg while containing imported inflation and maintaining financial stability.
What you should know
Central banks across Africa are adjusting monetary policy in response to renewed global inflation risks driven by higher energy prices and geopolitical developments.
- Namibia’s repo rate now stands at 6.75% following the 25-basis-point increase.
- South Africa raised interest rates at its May policy meeting after a three-year pause.
- The Central Bank of Nigeria (CBN) maintained its Monetary Policy Rate (MPR) at 26.5% after the conclusion of its 305th MPC meeting in May 2026.
Policymakers across the continent continue to balance inflation control with the need to support economic growth amid uncertain global conditions.
