Namibia’s repo rate:Why it rarely moves alone

Bank of Namibia governor Ebson Uanguta will today announce the new repurchase rate for the next three months. At every announcement, every governor of the central bank has always said “guided by a comprehensive assessment of the latest economic indicators and mindful of the need to safeguard the peg between the Namibia dollar and the South African rand, the monetary policy committee decided to… ” either change or maintain the repo rate. Namibia’s current repo rate stands at 6. 75%. According to central bank policy rate logs from the Bank of Namibia and the South African Reserve Bank, Namibia and South Africa generally move their interest rates in the same direction, but the Bank of Namibia does not always make the same changes or act at the same time. The reason is that the Namibia dollar is pegged to the South African rand, meaning the two currencies have the same value.

When the Covid-19 pandemic hit in 2020, both central banks cut interest rates sharply to make borrowing cheaper and support struggling households and businesses. South Africa’s repo rate fell to 3. 5%, while Namibia’s dropped to 3. 75%. The direction changed in 2022 when inflation globally started soaring. Both central banks increased interest rates to help bring inflation under control. But the two countries did not raise rates to exactly the same levels. South Africa’s repo rate reached 8. 25% in May 2023, while Namibia’s peaked at 7. 75% in June that year. Namibia maintained its lower rate for more than a year. Namibia also started cutting rates earlier in 2024, reducing its repo rate to 7. 5% in August, a month before South Africa made its first cut in September. The rate-cutting trend continued into 2025. By October that year, Namibia’s repo rate had fallen to 6. 5%. South Africa’s rate reached 6. 75% in…