The Bank of Namibia typically mirrors rate decisions by the South African Reserve Bank to safeguard the 1:1 link between the Namibian dollar and South African rand.

Namibia's annual inflation climbed to 6.8% in July from 6.0% in June, with food and fuel among major contributors.

"The decision was taken with due consideration of the persistent inflationary pressures, ... the adopted monetary policy stance is necessary to narrow the current negative real policy interest rate," deputy governor Ebson Uanguta said.

Inflation is now forecast to average around 5.8% for the year, down slightly from the 5.9% forecast at the last Monetary Policy Committee (MPC) meeting in June.

The Bank of Namibia expects the domestic economy to grow around 3.2% in 2022, up from an estimate of 3% at the last MPC meeting, mainly driven by a recovery in the mining, electricity, water and tourism sectors.

The South African central bank's rate hike last month was its biggest in two decades.

(Reporting by Nyasha Nyaungwa; Writing by Bhargav Acharya; Editing by Alexander Winning and Tomasz Janowski)

By Nyasha Nyaungwa