Namibia central bank raises key policy rate by 25 basis points

Namibia’s central bank raised its benchmark rate by 25 basis points to 6.75 percent .

According to the bank, the decision was necessary to avoid possible capital outflows that could put pressure on the country’s reserves.

However, inflation rate jumped to 5.3 percent in January from 3.7 percent in December, while the country’s average inflation rate for 2015 eased to 3.4 percent from 5.4 percent in 2014.

“Although the annual inflation rate remained low and stable in 2015, it rose in January 2016 and is expected to rise further for the most part of 2016,” the bank said in a statement.

The currency which is pegged to the South African rand has depreciated by 25 percent against the US dollar since 2015.

Economists had expected Namibia’s central bank to raise its rate following the South African Reserve Bank’s 50-basis point rate hike in January.