August 25, 2010 3:54 PM EDT
Namibia's central bank left interest rates unchanged on Wednesday, saying the economic recovery would continue to gain momentum while rising domestic demand and commodity prices posed upside risks for inflation.
The Bank of Namibia kept the repo rate steady at 7 percent, having trimmed it by 350 basis points between December 2008 and June last year to boost flagging growth after the global downturn hit demand for exports from its key mining sector.
The bank's executive "is of the view that in line with the improved global economic outlook, the Namibian economy would continue to gain momentum," Governor Ipumbu Shiimi said in a statement.
While inflation pressures remain subdued, "(the) direct and indirect impact of large increases in administered prices, firmer domestic demand and rising commodity prices" posed upside risks.
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Consumer price inflation quickened to 4.6 percent year-on-year in July from 4.3 percent in June, data released last week showed.
On Wednesday Shiimi was optimistic that the economy could grow by more than 4.0 percent this year mainly due to diamonds, but said the bank was worried about the sustainability of the global recovery which would have an impact on domestic growth.
A Reuters poll of economists last month saw growth in the world's largest uranium producer at 3.5 percent this year, quickening to 4.0 percent in 2011.
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