Namibia raises interest rate for first time in three years

Namibia's central bank has raised its benchmark interest rate for the first time in three years, moving to contain rising inflation driven by higher global oil prices.

The Bank of Namibia lifted its key repo rate by 25 basis points to 6.75% at its June meeting, after holding it steady at 6.50% for three consecutive sittings. It was the first increase since the bank began a prolonged pause.

The decision followed a pickup in inflation, which accelerated to 4.1% year on year in May from 3.1% in April. Policymakers said the tighter stance was appropriate to guard against inflationary risks from the energy shock.

A key consideration was protecting the long-standing peg between the Namibian dollar and the South African rand, which anchors monetary policy in the small southern African economy. The central bank now expects inflation to average 4.0% in 2026, above its earlier forecast of 3.7%.

The move reflects a broader balancing act for central banks across the region, weighing the need to support growth against the imperative of keeping prices and currencies stable amid volatile global energy markets.