Namibia central bank lifts lending rate by 25 basis points to 6.0 pct

JOHANNESBURG (Reuters) - Namibia's central bank hiked interest rates by 25 basis points to 6.0 percent on Wednesday as it seeks to contain strong household credit growth, which it said was putting pressure on the country's reserves. Credit demand, from households as well the business sector, swelled by 1.4 percent to 15.3 percent for the first half of 2014, compared to 13.9 percent during the last six months of 2013. "The growth in household credit was mainly dominated by installment credit, overdrafts and other loans and advances, which regrettably are also used to finance unproductive imported luxury goods," the Bank of Namibia said in a statement. The bank said, however, the prospects of economic growth for the remainder of the year were "encouraging". It cited construction activities and strong domestic demand as offsetting the lingering credit risks, a growing trade deficit and falling international commodity prices - the latter hurting production in uranium and zinc sectors. Annual inflation in Namibia slowed to 5.6 percent in July, after rising in the first six months of the year and peaking at 6.1 percent in June, data last week showed. The central bank said it expected inflation to average six percent for the rest of the year.