Tonderai Katswara
11 April 2008
Windhoek — The Bank of Namibia has decided to keep its key bank rate steady at 10,5 per cent for the second time this year.
This will come as good news to consumers as fuel prices are set to rise on Monday. This year started off on a bad note for consumers, who have to endure a constantly rising cost of living as the prices of basic commodities increase at an alarming rate.
Food prices have gone up at an annual rate of 15,6 per cent in February from 15 per cent in January.
The sharp rise in food prices has been attributed to droughts, farmers switching to planting crops for bio-fuels, and an increasing demand of protein in fast-growing economies like India and China.
These conditions are seen to beset the world for a long time to come, making life miserable and a continuous struggle for consumers. But BoN Governor Tom Alweendo said yesterday that after taking all economic conditions into account, the bank rate would stay the same. "The Bank is also worried about the major uncertainties in the global economic outlook and the potential impact on our economy. Despite these risks to the inflation outlook, the bank, however, noted the continuous moderation in the domestic demand conditions, showing that the current monetary policy stance has been successful in suppressing domestic demand and has, therefore, decided to keep the bank rate unchanged at 10,5 percent per annum, for the time being."
Alweendo warned that the country's inflation outlook was worsening, especially due to outside influencing factors like high crude oil prices and food prices. Annual inflation has been on an upward trend since last year and keeps surging. It increased to 7,9 per cent in February from 7,8 per cent in January. Transport inflation, said Alweendo, was relatively high at 7,5 per cent and was expected to go up on the back of rising fuel costs.
South Africa, with which Namibia shares the Common Monetary Area together with Lesotho and Swaziland, has raised its repo rate twice already this year - now currently at 11,5 per cent.
Last week, SARB governor Tito Mboweni explained during a talk in Windhoek that although the four countries had a shared financial market through the currency union, they were not expected to have identical interest rate policies.
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