Namibia leaves rates steady

Namibia left its key lending rate unchanged at 5.5 percent for the second straight time on Wednesday, saying inflation was within tolerable levels.

The bank previously reduced rates in August to support an economy hit by the global economic slowdown.

“The accommodative monetary policy maintained throughout the past year has helped boost demand in the domestic economy,” said the Bank of Namibia's Deputy Governor Ebson Uanguta, adding that the low interest rate environment should be maintained to make sure growth is supported.

The bank cut its economic growth forecasts because of a fall in diamond exports, to 4.6 percent and 4.3 percent in 2012 and 2013 respectively. The economy expanded by 4.8 percent in 2011.

Economists polled by Reuters last month forecast GDP growth of 4.1 percent in 2012 and 4.5 percent in 2013.

Namibia is one of the world's biggest diamond producers and a major source of uranium.

The resource-rich nation suffered a double-blow to growth in 2009 when floods destroyed infrastructure and crops. The global economic recession slowed booming demand for its commodities.

At its last policy-setting meeting on Wednesday the bank said inflation, although on the rise, remained “within tolerable levels” and should average 6.5 percent in 2012.

Headline CPI quickened to 7.1 percent on a year-on-year basis in October.

“If inflation hits double figures we will start getting concerned,” Deputy Governor Ebson Uanguta said.

The budget deficit for the 2012/13 fiscal year is estimated to narrow sharply to 4.6 percent of GDP, from 7.1 percent last year, because of better tax collection and under spending on public projects. - Reuters