Namibia central bank cuts main rate as inflation slows

By Nyasha Nyaungwa

WINDHOEK (Reuters) -Namibia's central bank cut its main interest rate by 25 basis points on Wednesday, citing a slowdown in inflation and inflation expectations.

The Bank of Namibia reduced its repo rate to 7.50% from 7.75%, where the rate had been since June 2023.

Namibia's inflation was at 4.6% year on year in July, the same level as in June but down from 4.9% in May.

The central bank revised down its average inflation forecast for this year to 4.7%, versus a 4.9% forecast given at its last Monetary Policy Committee meeting in June.

It attributed the downward revision to an appreciation of the Namibian dollar and a moderation in crude oil prices.

"With inflation and inflation expectations slowing and nominal interest rates unchanged, real interest rates have increased thereby signalling an effective tightening of monetary policy," central bank Governor Johannes !Gawaxab said in a statement accompanying the decision.

"Considering these factors, the MPC felt that a moderate easing of monetary policy was warranted."

The central bank reduced its 2024 economic growth forecast by 0.6 percentage point to 3.1%, partly because of a severe drought gripping the southern African region.

(Writing by Bhargav AcharyaEditing by Alexander Winning and Toby Chopra)

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