Bloomberg News

Namibia Central Bank Leaves Rate Unchanged to Boost Growth

June 22, 2011

(Updates with governor’s comments starting in third paragraph.)

June 22 (Bloomberg) -- Namibia’s central bank left its benchmark interest rate unchanged to help support a recovery in economic growth even after the inflation rate rose to a 14-month high.

The repo rate stayed at 6 percent, Bank of Namibia Governor Ipumbu Shiimi told reporters today in the capital, Windhoek. The bank has kept the rate unchanged this year after reducing it at the last two meetings of 2010 to boost growth.

The decision was to “give the economy breathing space,” he said. Growth in mining and agriculture may slow and the central bank will probably cut its forecast for economic expansion this year from 4.1 percent, Shiimi said.

The economy in Namibia, the world’s biggest miner of offshore diamonds and the fourth-largest producer of uranium, grew 4.6 percent last year after contracting the year before, according to the central bank. Inflation accelerated to 5.2 percent in May, the fastest pace since March last year, the country’s statistics office said on June 14. The inflation rate reached a five-year low of 3.1 percent in February.

“Inflation pressures continue to rise, which is a worrying factor,” Shiimi said. The rate was still within “reasonable levels,” he said in an interview with CNBC Africa after the decision.

The decision is in line with neighboring South Africa’s move to keep its benchmark rate at 5.5 percent last month. Namibia’s currency is pegged to the South African rand and the central bank generally follows monetary policy set by the South African Reserve Bank.

--Editors: Gordon Bell, Philip Sanders

To contact the reporter on this story: Chamwe Kaira in Windhoek at ckaira@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net


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