Namibia's central bank maintained its repo rate at 6.0 percent to "support domestic economic activities" while it monitors the impact of the two interest rate increases in June and August.
But the Bank of Namibia, which has raised its rate by a total of 50 basis points this year, said it was still concerned over the strong growth in household credit that is largely financing the import of unproductive luxury goods, such as cars, and putting pressure on international reserves.
The central bank said credit to the private sector increased to an average rate of 15.5 percent in the first eight months of the year from 14.2 percent in the previous eight month period, with strong growth in credit to individuals in overdrafts, loans, advances and installment credit.
This resulted in a further widening of the trade deficit in January-August period, the bank said, adding that its international reserves remain sufficient to meet its foreign obligations.
While the central bank did not provide any data for international reserves, it said in August that foreign exchange reserves had declined 15 percent since the start of the year to 15.9 billion Namibian dollars (NAD) in June.
Data showed that foreign exchange had risen in April to 17.482 billion NAD from 14.595 billion in March.
In the second quarter of this year, Namibia's trade deficit amounted to 5.649 billion NAD, down from 6.785 billion in the first quarter while the current account deficit in the same period fell to 1.685 billion NAD from 3.216 billion.
Namibia's inflation rate eased to 5.3 percent in September from 5.4 percent in August, continuing the decline since hitting a 2014-high of 6.1 percent in June, with the decline mainly reflected in the cost of food, transport and housing, the bank said.
Inflation is expected to average around 5.5 percent for 2014, the bank said, down from its August estimate of 6.0 percent.
Namibia's economy has benefited from exports of diamonds, beef and fish and the bank said it is expected to improve this year compared with last year, supported by construction, strong domestic demand, diamond mining and manufacturing.
But activity in agriculture, uranium and zinc production have performed poorly in the first eight months of the year, the bank added.
The risk to growth remains low commodity prices due to depressed demand which could negatively affect export earnings, mining profits and employment.
On Sept. 30, the central bank forecast in its quarterly report that the economy would expand 5.4 percent this year, up from an estimated 5.1 percent growth in 2013.