WINDHOEK, March 28 (Xinhua) -- Namibia's central bank will implement further monetary easing in 2018, cutting the policy rate by 25 basis points to 6.50 percent, according to a forecast by the Fitch Group company, Business Monitor International (BMI) Research.
Monetary easing is the action by the central bank aimed at boosting the money supply and stimulating economic activity.
In the Africa Monitor, an economic outlook report released on Wednesday, BMI states that monetary easing will allow Namibian policymakers to support the country's one-to-one peg with the South African rand while stimulating the Namibian economy in an environment of low inflation.
"The Bank of Namibia (BoN) is nearing, but has not yet reached, the end of its easing cycle. After having cut its benchmark interest rate, in August 2017 by 25 basis points to 6.75 percent, we forecast that Namibian policymakers will implement a final cut of 25 bps in 2018, likely earlier in the year rather than later," BMI said.
According to the forecast, the cut will come as the BoN continues to mirror the South Africa Reserve Bank interest rate policy, in a bid to help support the Namibian dollar's peg to the South African rand.
Meanwhile, BMI anticipates inflation to remain within the Bank of Namibia's target band of 3 percent to 6 percent, and while real Gross Domestic Product growth will begin to accelerate, it will remain relatively subdued.
