Namibian MPC delivers Rate Cut Though Bolder Policies remain at Large

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Friday, August 16, 2019   / 05:00PM / United Capital Research / Header Image Credit: NewEra

 

Earlier this week, the Bank of Namibia's Monetary Policy Committee (MPC) decided to trim its key policy rate (Repo), for the first time in 2-years, by 25bps to 6.5%. This is on the back of the recent dovish chorus across the globe amid concerns of slowing growth. Beyond this, the moderation in the inflation rate (down 151bps YTD to 3.6%, as Jul-19), as well as the recessionary status of the Southern African nation (Q1-19 GDP: -2.0y/y)  had necessitated the accommodative stance. 

Yet, outside of its domestic economy's dynamics, the fortunes of the country remained tied to its large neighbor, South Africa. For context, the MPC stated clearly that the policy rate action was taken to maintain the currency parity between the Namibian dollar and the South African rand. That is to say, they are merely replicating the 25bps rate cut delivered by South African Reverses Bank in Jul19. Additionally, the Namibian economic outcomes have been worsened by the anemic power supply in South Africa as they rely on power importation for survival.   

Although the IMF excepts economic growth to turn positive in 2020, we believe like many struggling African nations, structural reforms are needed to strengthen productivity, competitiveness, lift business confidence and boost the long-term growth potential of the economy.  

 

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Looking Forward

Egypt

Monetary Policy Decision - August 22nd

Jun-19 Trade Balance - August 31st

 

Ghana

Producer Price Index - August 21st 

 

Kenya

Jul-19 (CPI) Inflation - August  31st

 

Morocco

Jul-19 (CPI) Inflation – August  22nd

 

Nigeria

Q2-19 Capital Importation - August 20th

Q2-19 GDP - August 22nd 

 

South Africa

Inflation - August 21st 

 

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