WINDHOEK, Oct 16 (Reuters) – Namibia’s central bank cut its main interest rate for the second meeting in a row on Wednesday, saying inflation had fallen surprisingly quickly and that the economy needed more support.

Its Monetary Policy Committee (MPC) unanimously decided to cut the repo rate by 25 basis points to 7.25%, the same size of cut as at August’s meeting.

“The MPC noted the growing momentum in the international monetary policy easing cycle, the retreat in domestic inflation over the medium term, along with the recent downside surprise in the September 2024 inflation print,” Bank of Namibia Governor Johannes !Gawaxab said in a statement accompanying the decision.

Annual inflation in the southern African country fell to 3.4% in September, a steep drop from the 4.4% posted in August.

The central bank on Wednesday revised down its average inflation forecast for this year to 4.3%, versus a 4.7% forecast given at its last meeting.

It attributed the revision to a more favourable outlook for international oil prices and a stronger domestic exchange rate.

The bank said private sector credit extension remained subdued, suggesting that further support to the domestic economy was warranted.

“The domestic economy, while growing at a moderate pace, was operating below full capacity,” !Gawaxab said.

Growth is projected to slow to 3.1% in 2024, compared to 4.2% in 2023.

On a $750 million Eurobond redemption due in late 2025, the central bank governor said Namibia had already set aside 82% of the $500 million it wants to retire at maturity. The government still hopes to refinance the remaining $250 million, !Gawaxab said.

(Writing by Tannur Anders; Editing by Alexander Winning and Gareth Jones)