Namibia cbank cuts bank rate to prop up growth

WINDHOEK (Reuters) - Namibia's central bank reduced its bank rate by 50 basis points to 5.5 percent on Wednesday, the first reduction in 20 months, to support the struggling economy as a global downturn weighs on the domestic outlook in the leading uranium producer.

Prior to Wednesday's move, the Bank of Namibia had kept the rate at 6.0 percent after last cutting it by 75 basis points in December 2010.

"Elevated risks to global growth have potential spillover effects for the domestic economy in light of the trade linkages and openness of the Namibian economy," Governor Ipumbu Shiimi told a news conference after a meeting of the monetary policy committee (MPC).

"The MPC finds that a measure of monetary policy easing is necessary to support the ailing sectors of the economy and further shore up the subdued growth outlook."

Namibia's growth remains fairly sluggish after a global recession in 2008/9 hit exports, although the central bank expects slightly higher GDP expansion of 4.2 percent this year from 3.8 percent in 2011.

The bank noted rising price pressures, but believed inflation would remain "within tolerable ranges for the foreseeable future".

Consumer inflation slowed to its lowest level this year at 5.6 percent year-on-year in June from 6 percent in May, the latest data from the Central Bureau of Statistics shows.

The country's foreign currency reserves were sufficient to support the local currency peg, Shiimi said.

Source: http://news.yahoo.com/namibia-cbank-cuts-bank-rate-50-bps-5-103251817--business.html

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