The local repo rate will remain unchanged at 5.5% over the next two months, the Bank of Namibia’s (BoN) Monetary Policy Committee (MPC) resolved in their most deliberation on Tuesday.
The announcement, which was made by the bank’s deputy governor, Edson Uanguta at a press briefing on Wednesday, revealed that the bank has opted to follow in the footsteps of more developed countries that have decided to keep their monetary policies unchanged despite the sluggish growth of their economies.
“Notwithstanding positive signs locally, Namibia remains an open economy, and as such is exposed to uncertainties and and vulnerabilities that have buffeted the global economy. It is therefore upon this backdrop that the MPC continues to hold the view that the current low interest rate environment should be maintained in order to ensure that growth is supported in the local economy going forward,” Uanguta said.
“To this effect, the MPC resolved to keep the Repo rate unchanged at the current level of 5.5%,” he added.
In esscence, the Repo rate is the discount rate at which Bank of Namibia repurchases government securities from the commercial banks such as First National Bank of Namibia, Standard Bank Namibia, Bank Windhoek etc. depending on the level of money supply it decides to maintain in the country’smonetary system. To temporarily expand the money supply, the Bank of Namibia decreases repo rates (so that banks can swap their holdings of government securities for cash). To contract the money supply it increases the repo rates. Alternatively, the Bank of Namibia may decide on a desired level of money supply and lets the market determine the appropriate repo rate. The term Repo is short for repossession, as in the buying back of the government securities.
By Penda Jonas Hashoongo
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