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BL Premium reports that as had been widely expected, the Monetary Policy Committee (MPC) of the SA Reserve Bank (SARB) has kept the repo rate steady at 8.25% for a seventh consecutive meeting, warning again that “the battle against inflation is not yet won”.
Still, a more positive outlook that inflation will ease more quickly than previously expected has raised expectations that the Bank could start cutting rates at its next meeting in September. On Thursday, Governor Lesetja Kganyago said four members of the committee preferred an unchanged stance and two preferred a reduction of 25 basis points. “In discussing the stance, MPC members agreed that restrictive policy remains appropriate to stabilise inflation at 4.5%,” Kganyago said. He reported that SA’s consumer inflation outlook had improved and the Bank now expected inflation to return to the midpoint of its 3%-6% target band in the fourth quarter of 2024, after previously forecasting price increases would dip below 4.5% only by the second quarter of 2025. Headline consumer price inflation for 2024 is now projected at 4.9%, compared with the 5.1% forecast at the previous meeting. Kganyago said the MPC had previously identified that higher food prices could pose a risk to inflation down the line despite recent disinflation in the category. The repo rate was last adjusted in May 2023, when the Bank raised the rate by 50 basis points (bps) to a 15-year high of 8.25%. Borrowing costs have surged 475 bps since November 2021, putting pressure on indebted South Africans and the economy.
- Read the full original of the report in the above regard by Denene Erasmus at BusinessLive (subscriber access only)
- Lees ook, Rentekoers weer onveranderd, by Maroela Media
Get other news reports at the SA Labour News home page