Namibia and Uganda Central Bank Hold Key Interest Rate

Namibia Holds Interest Rate at 3.75% to Support Economic Growth
Namibia’s central bank held its key interest rate steady for a fourth meeting as it seeks to support economic growth and protect its peg to the South African rand.
The monetary policy committee kept the rate at 3.75%, Governor Johannes !Gawaxab told reporters Wednesday in the capital, Windhoek. It follows an unchanged decision by the South African Reserve Bank last month, and means Namibia’s benchmark rate remains 25 basis points higher than its neighbor’s.
Namibia’s dollar is pegged to the rand and while the arid south-west African nation’s economy contracted by a record 8% in 2020, a cut that results in an interest rate that’s lower than South Africa’s would make it difficult to maintain its reserves and the currency peg.
The central bank’s international reserves stood at 34.7 billion Namibian dollars ($2.4 billion) at the end of March, which is sufficient to support the peg and will cover 5.4 months of imports, !Gawaxab said. The central bank projects the economy will grow 2.7% this year.

Uganda Central Bank Holds Key Interest Rate at 7% for 5th Time
Bank of Uganda’s monetary policy committee leaves rate at a record low for fifth consecutive meeting, Governor Emmanuel Tumusiime-Mutebile says in an emailed statement.
Economic recovery is stronger than projected at previous meeting in February
GDP growth contracted by 1.1% in 2020, compared with projection of 2%
“There’s limited fiscal policy space to respond to fragile economic growth. With the rising public debt, fiscal adjustment through higher taxes, lower expenditure or both, might be required in the coming years to avoid a persistent increase in indebtedness and this could constrain demand”
Inflation remains favorable; could rise temporarily in the near term
Final spending decision on oil pipeline, which puts Uganda on path to exporting crude by 2025, seen triggering higher investment inflows and private business
NOTE: Uganda’s March Inflation Rate Rises to 4.1% y/yT