Namibia raises key interest rate

The Bank of Namibia increased its key interest rate by 25 basis points, bringing it to 7 percent, after a meeting on October 26 and 27. The decision was made to address rising inflationary pressures, particularly from increasing energy costs.

Rising energy prices fuel inflation

International oil prices have climbed, with Brent crude closing at $123.10 per barrel on October 27, the highest level in over six months. This increase has contributed to rising inflation in Namibia, which reached 5.4 percent in September 2026, up from 4.4 percent in June.

Transport costs drive inflation

The Bank of Namibia attributes the recent inflation increase primarily to rising transport costs. These costs affect the prices of many goods and services and are linked to higher fuel prices, which are driven by global oil market trends.

Namibia’s dependence on imported fuel

Namibia relies heavily on imported refined petroleum products, with most of its fuel coming from external suppliers. This dependence makes the country vulnerable to international price fluctuations and supply chain disruptions, such as those related to its temporary agreement with Vitol for fuel imports.

Trade deficit worsens

Namibia’s trade deficit expanded significantly in 2026, reaching 33.5 billion Namibian dollars between January and August, compared to 17.8 billion during the same period in 2025. Increased imports of energy products, including oil and coal, have contributed to this growing deficit.

Inflation outlook remains uncertain

The Bank of Namibia predicts an average inflation rate of 4.2 percent for 2026, slightly higher than 3.5 percent in 2025. However, this forecast depends on how energy prices evolve, with a projected slowdown to 4 percent in 2027. The next monetary policy meeting in December will assess these challenges.