Home Business South African Reserve Bank Maintains Repo Rate at 8.25%

South African Reserve Bank Maintains Repo Rate at 8.25%

by Central News Reporter
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Reserve Bank

Pretoria – The South African Reserve Bank (SARB) announced on Wednesday its decision to keep the repurchase rate, or repo rate, unchanged at 8.25%, in a move that aligns with the bank’s commitment to stabilising inflation and fostering economic stability.

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South African Reserve Bank Maintains Repo Rate at 8.25% 3

During a widely anticipated media briefing, SARB Governor Lesetja Kganyago presented a unanimous resolution by the Monetary Policy Committee (MPC). The Governor’s statement drew attention to various influencing factors, including the moderation of inflation expectations and the volatile conditions affecting food prices and the national currency.

Kganyago expounded on the dynamics at play, saying, “In assessing this forecast, the MPC noted a range of risks. Inflation expectations have moderated in the latest survey. This is welcome, but two-year-ahead expectations are still in the top half of our target range.”

He went on to predict a gradual decline in inflationary pressures, anticipating them to converge towards their objective of 4.5%. However, Kganyago highlighted concerns over the agricultural sector, which is presently navigating through a challenging period due to adverse weather conditions posing a threat to food inflation rates.

Addressing the South African currency, Kganyago expressed that the rand has faced some weakness, influenced by enduring high interest rates in major advanced economies and a general atmosphere of uncertainty in the domestic market. The Governor described the rand as undervalued and indicated that the current policy stance remains restrictive to keep inflation expectations in check.

“The inflation and repo rate projections from the Quarterly Projection Model remain a broad policy guide, changing from meeting to meeting in response to new data. Committee decisions will continue to be data-dependent, and sensitive to the balance of risks to the outlook. Stabilising inflation at the mid-point of the target band will improve the economic outlook and reduce borrowing costs,” Kganyago stated.

Governor Kganyago also reiterated the necessity for additional measures to ameliorate economic conditions, citing the importance of prudent public debt management, efficiency in network industries, controlled administered price inflation, and alignment of real wage growth with productivity.

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