Namibian banks respond to repo cut by reducing lending rates

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Some banks in Namibia have responded to the repo rate cut announced by the central bank Wednesday.

The Bank of Namibia cut the repo rate by 25 basis points from 7% to 6.75% citing a decline in inflation.

Inflation has declined consistently on a monthly basis since the 8.2% high in January; in July it fell to 5.4%, which is within the preferred range of 6.0 to 3.0%.

Standard Bank Namibia said Thursday that they had cut both the lending and home loan base rates by 0.25% as of Aug. 16.

The new prime lending and home base rates, the bank said, will drop from 10.75 to 10.50% .

Also on Thursday, Bank Windhoek said they had also decreased their prime lending rate by 0.25%, from 10.75% to 10.50%.

“The mortgage lending rate will decrease from 11.75 to 11.50%,” Bank Windhoek said in a statement.

Bank Windhoek sees the repo rate cut as a relief to the economy that has been struggling over the last year.

“The dire condition of the domestic economy as evinced by the recession, falling inflation, high unemployment and weak credit growth has long since necessitated rate cuts,” Bank Windhoek said.

Most central banks in developed economies, Bank Windhoek said, have turned dovish which tilts interest rate differentials in Namibia’s favour and supports capital inflows.

“The outlook for global growth is quite positive which couldn’t have come at a better time in light of the recovery in the agricultural and mining industry,” Bank Windhoek added. Enditem

– By ANA