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Namibia's central bank left its bank rate steady at 6.0 percent on Wednesday as it attempts to ensure economic growth -likely to be slower than previously forecast - is sustained.
The bank rate has been stable since the start of 2011, with the bank last reducing it by 75 basis points in December. The bank cut rates by 450 basis points between December 2008 and December 2010.
“Despite the eased inflationary pressure there is a need to ensure sustained growth in the domestic economy. Raising the rate at this point could choke off growth,” said central bank Governor Ipumbu Shiimi.
Annual inflation slowed to a three month low of 4.8 percent in July.
Namibia's central bank says global uncertainties and domestic challenges to growth, mainly from operational problems in the mining sector, clouded the short term growth outlook.
It said was likely to cut its gross domestic product forecasts down from a forecast of 4.9 percent.
“We still see good growth prospects domestically, but this cannot happen in isolation from developments in the world economy,” Shiimi said.
Economist in a Reuters poll expected GDP growth of 4.1 percent this year from 4.8 percent in 2010.
The bank also said government debt as a ratio of GDP would likely rise from to about 30 percent from 15 percent because of a large public work programme that the country is embarking on, however remaining in a “prudent range”. - Reuters
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