Namibia's interest rate steady

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Namibia's central bank kept its bank rate steady at 6.0 percent on Wednesday, citing downside risks to the growth outlook and saying domestic price pressures were abating, with inflation expected to remain stable over the medium term.

The Bank of Namibia's monetary policy committee (MPC) has previously said it would not be appropriate to raise interest rates as concerns about growth outweigh those over rising inflation.

“The global prospects continue to be gloomy. Although the domestic economy continues to show positive growth in contrast, the trade and financial linkages dictate that the balance of risks remains tilted to the downside,” Governor Ipumbu Shiimi told a news conference.

“The MPC further noted the abating inflationary pressures in the domestic economy and is of the view that the inflation rate will remain stable over the medium term.”

Consumer inflation in the mineral-rich southwest African nation slowed to a six-month low of 6.0 percent in May from 6.4 percent in April.

Growth remains fairly sluggish in the one of the world's biggest uranium producers after a global recession hit exports. The central bank expects GDP expansion of 4.2 percent this year from 3.8 percent in 2011.

The Bank was worried about increased borrowing to buy luxury items, with credit extension growing by 13.2 percent year-on-year in April, its fastest since December 2007, compared with 12.5 percent in March, Shiimi said.

In contrast, the savings rate had fallen to 18 percent of GDP after peaking at 34 percent in 2006, he said. - Reuters

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