Namibia's central bank left its main lending rate unchanged at 6.50% on Wednesday, saying neighbouring South Africa's decision to lower its inflation target meant it had to be extra careful about controlling price pressures.

Namibia's monetary policy is closely aligned with South Africa's as the Namibian dollar is pegged to the rand.

South Africa's government changed the country's inflation target to 3% last month from the previous 3%-6% range.

"The formal adoption of the 3% inflation target by South Africa necessitates additional vigilance by the Namibian authorities in managing domestic inflation to ensure the continued smooth functioning of the exchange rate peg," the Bank of Namibia said in a statement.

The central bank also said it wanted to narrow the interest rate differential with South Africa, whose benchmark rate is 25 basis points higher.

It lowered its forecast of Namibia's 2025 economic growth to 3.0% from a prediction of 3.5% at its October policy meeting, citing difficulties faced by sectors like manufacturing and diamond mining.

Its inflation forecast for this year was maintained at 3.6%, but for next year it was revised down by 0.2 percentage point to 3.8% - from a previously expected 4% - because of a stronger exchange rate assumption and a favourable oil price outlook.

Namibia's inflation edged up to 3.6% year on year in October from 3.5% in September.

Wednesday's interest rate announcement was the last under Governor Johannes !Gawaxab, who is leaving his post at the end of 2025. The next governor is yet to be named.