Rand hit new all-time low COVID-19

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Reserve Bank averts inflation and keeps repo rate unchanged

A slight breather for South Africa’s economy, for now.

Rand hit new all-time low COVID-19

Photo: Adobe Stock

The Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB) has maintained the repurchase rate (repo rate) at 6.75%, Governor Lesetja Kganyago announced on Thursday.

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Reserve Bank reasons behind unchanged repo rate

Addressing reporters, Kganyago said the MPC had reached the decision after assessing overall risks to the inflation outlook to be more or less evenly balanced.

“Key upside risks are rising administered prices, including electricity and water tariffs, rising domestic food prices in the outer years and higher international oil prices,” he said.

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Kganyago said the downside risks include lower global inflation and an extended period of monetary accommodation in advanced economies.

Monetary policy actions will continue to focus on anchoring inflation expectations closer to the mid-point of the inflation target, in the interest of balanced and sustainable growth.

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Future policy adjustments will be data-dependent

The MPC is of the view that there is little evidence of demand side pressures in the economy. Over the medium term, cost-push factors could arise from higher electricity, fuel and food prices.

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The approach of the MPC is to focus on the possible second-round effects of supply side shocks. Any future policy adjustments will continue to be data dependent.

Kganyago said the MPC continues to assess the stance of monetary policy to be accommodative.