Namibia’s Central bank kept its ​main interest rate unchanged at 6.50% on Wednesday, saying the ‌outlook for economic growth and inflation had worsened due to the spill over effects of the Iran war.

It was the third meeting in a row the Bank ​of Namibia has maintained its repo rate.

Annual inflation slowed to 2.1% in ​March, down from 2.4% in February and hitting its ⁠lowest level since 2020, though it is expected to pick up ​in the months ahead.

In an effort to cushion the impact of ​the global energy price surge triggered by the United States and Israeli war against Iran, the Southern African country’s government cut fuel levies by 50% for at least three months ​until the end of June.

“Risks to the domestic inflation outlook ​remain tilted to the upside, notably through potential increases in administered prices, exchange rate ‌volatility, ⁠and the spillover effects of the prolonged war in the Middle East,” Central Bank Governor Ebson Uanguta told a press conference.

Inflation is expected to average 3.7% this year, higher than the 3.5% forecast ​given at the ​bank’s last ⁠policy meeting in February.

Earlier this month the central bank lowered its economic growth forecasts for this year and ​next, citing a weaker-than-expected performance of primary industries, especially ​metals ⁠and diamond mining.

Namibia’s monetary policy decisions typically mirror those of its neighbour South Africa, as the two countries’ currencies are pegged one-to-one and ⁠their economies ​closely linked.

South Africa’s Central bank kept its ​key rate at 6.75% at last month’s rate-setting meeting.

–Reuters–