BoN announces rate hike

The bank’s rate increase became effective from Friday, 08 December 2006.

The Bank ‘s Deputy Governor, Paul Hartmann, said at a media conference that based on the review of the recent economic developments, the Bank was concerned about the unabated rise in inflation in the country and in the process decided to increase the rate.

Despite international prices slowing, future developments are uncertain due to the persistent threats of instability in some of the major oil producing countries while the robust domestic demand, money supply growth, high net domestic credit extension, generally high fuel prices, rising food prices and the depreciating domestic currency continued to pose a major risk to the domestic inflation outlook, Hartmann said.

Considering the economic developments, he said, the bank’s management felt it necessary to take an appropriate monetary policy stance to lessen the risks by the factors of inflation, said the Deputy Governor.

“As a consequence, the Bank has decided to increase the bank rate by 50 basis points from 8.50 per cent to 9.00 per cent. The bank does not expect that the current rate adjustment will have a significant impact on the real economic activities, as it is mainly aimed at managing the consumer demand pressure resulting from the extension of the credit. The bank will continue to do everything necessary to further tame inflationary pressures in order to lessen its damaging impact on the Namibian economy,” noted Hartmann. ‘ NAMPA.

December 2006
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