The Bank of Namibia (BoN)’s Monetary Policy Committee (MPC) has resolved to keep the repo rate unchanged at 3.75 per cent, BoN governor Johannes !Gawaxab announced on Wednesday.
Speaking at the MPC virtual meeting on Wednesday, !Gawaxab said the committee is of the view that the rate remains appropriate to continue supporting domestic economic activity, particularly in light of the alarming increase in COVID-19 infections and hospitalization.
“Domestic economic activity remained weak in the first four months of 2021. The rate of inflation increased during the first five months of 2021, while growth in the Private Sector Credit Extension (PSCE) remained subdued during the first four months of 2021.The stock of international reserves remained sufficient to support the currency peg. The slowdown in economic activity was mainly observed in the tourism, mining, agriculture, manufacturing, construction as well as transport and storage sectors. On the contrary, activity in the whole sale and retail sector as well as the telecommunications sub-sector recorded positive growth during the same period,” !Gawaxab said.
He added that recent monthly indicators showed that the mining, as well as the transport and storage sectors, gained some momentum.
Annual average inflation increased to 3.2 per cent during the first five months of 2021, compared to 2.1 per cent for the corresponding period in the previous year. The increase in inflation was mainly driven by an increase in food and housing inflation during the period under review.
“This was on account of supply constraints particularly for meat, coupled with the influence of base effects in the rental payment for dwelling sub category respectively. Moreover, transport inflation recently accelerated mainly driven by higher international oil prices when compared to corresponding period in 2020. On a monthly basis, overall inflation moderated to 3.8 per cent in May 2021 from 3.9 per cent registered in April 2021. Overall inflation is projected to average around 3.6 per cent for 2021, slightly higher than the previous forecast of 3.2 per cent,” !Gawaxab said.
He added that growth in the PSCE averaged 2.3 per cent for the first four months of 2021, lower than the average of 5.8 per cent recorded during the same period in 2020.
Source: Namibia Press Agency (NAMPA)