Business Reporter
FNB Namibia Economist Helena Mboti has opined that the Monetary Policy Committee (MPC) is expected to keep the repo rate unchanged at 6.75% at its upcoming meeting on 16 April 2025, maintaining the 75bp policy differential with the SARB.
Mboti said that the policy stance is likely to remain cautious in the near term, reflecting continued global uncertainty.
“While our GDP growth projection for 2025 remains above 4%, the recovery is uneven as we anticipate limited traction across key sectors. Headline inflation surprised to the upside, rising to 4.2% y/y in March 2025 from 3.6% in February, exceeding our forecast of 3.9%. The uptick was largely driven by higher alcohol, food, and transport prices, while housing-related costs continue to pose upward pressure. Core inflation remained elevated at 4.0% (Feb: 3.5%), supporting the case for a hold in the near term. We continue to expect inflation to remain elevated but contained, with pressures in housing and utilities likely to persist due to anticipated electricity tariff increases,” Mboti said.
She added that, at the same time, transport inflation is expected to remain subdued amid soft domestic demand.
“As a result, we have revised our April 2025 headline inflation forecast to 4.2% and lifted our average forecast for 2025 to 4.0% from 3.8% previously,” Mboti said.
The economist further added that GDP growth was recorded at 3.7% y/y in 2024, outperforming FNB’s forecast of 3.5%, underpinned by stronger-than-expected growth in the secondary sector, while domestic demand remained largely subdued.
“Despite improving economic momentum, weak disposable incomes continue to weigh on household credit growth, with PSCE remaining concentrated in corporate lending. FX reserves remain robust at NAD63bn, equivalent to 4.2 months of import cover, though we caution that upcoming Eurobond maturities and potential trade disruptions could place pressure on external buffers in the second half of this year,” Mboti said.
She concluded that the SARB held its repo rate steady at 7.5% in March 2025 and, while it continues to guide toward a terminal rate of 7.25%, FNB forecasts a lower endpoint of 7.00% in South Africa with two additional rate cuts of 25bps each.
“This view is underpinned by expectations of subdued inflation and soft domestic growth, though external risks — particularly trade and currency volatility — may complicate the monetary policy path. Idiosyncratic geopolitical tensions between the US and South Africa have further weighed on the rand, which has depreciated 3.1% year-to-date against the US dollar, currently ranking as the fourth worst-performing emerging market currency. In light of persistent external uncertainty, modest domestic demand, and manageable inflation dynamics, we expect the Namibian MPC to maintain a cautious stance and keep the repo rate unchanged at 6.75% on 16 April 2025,” Mboti said.
