Namibia raises interest rates for first time since 2023, joins Botswana, Rwanda

The Bank of Namibia has raised its benchmark interest rate for the first time since 2023, joining Botswana and Rwanda among African nations tightening monetary policy as rising energy costs fuel fresh inflation concerns.

Namibia’s central bank increased its repo rate by 25 basis points to 6.75 percent following the latest meeting of its Monetary Policy Committee.

Read also: Namibia holds rates for third straight time as Middle East war clouds outlook

The decision marks a shift after three years of stable rates and reflects growing concerns over rising prices, despite recent diplomatic efforts that helped reduce tensions between the United States and Iran.

“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 said.

Read also: Namibia pushes MICE, sustainability agenda at WTM Africa

Inflation in Namibia accelerated to 4.1 percent in May from 3.1 percent in April, driven largely by higher energy related costs. The rise came even after government efforts to ease the burden on consumers through cuts to fuel levies introduced to soften the impact of global oil price shocks linked to the Middle East conflict.

The Bank of Namibia also raised its inflation forecast for 2026 to 4.0 percent, up from its previous estimate of 3.7 percent released in April, signalling expectations that price pressures may remain elevated.

Although economic activity and private sector credit growth remain weak, policymakers said a moderate rate increase was needed to keep inflation under control and safeguard price stability.

Read also: Namibia’s history-making female president, vice president hold lesson for Nigeria

Namibia’s monetary policy remains closely tied to South Africa because the Namibian dollar is pegged one to one with the South African rand. This means decisions by South Africa’s central bank often shape the direction of Namibia’s interest rates.

South Africa also increased its benchmark rate by 25 basis points last month as it sought to contain inflation pressures caused by rising fuel and energy prices.

The latest move highlights a broader concern among African central banks that energy driven inflation could persist even as global oil markets have eased following recent geopolitical developments.