Interest Rates Remain Unchanged At 8.25 Percent

The South African Reserve Bank’s Monetary Policy Committee (MPC) has decided to keep the repurchase rate at its current level of 8.25% per year.

Announing the MPC’s decision on the repo rate, Reserve Bank Governor Lesetja Kganyago said three members of the Committee preferred to keep rates on hold and two preferred an increase of 25 basis points.

“At the current repurchase rate level, policy is restrictive, consistent with elevated inflation expectations and the inflation outlook. Serious upside risks to the inflation outlook remain. In light of these risks, the Committee remains vigilant and decisions will continue to be data dependent and sensitive to the balance of risks to the outlook,” Kganyago said on Thursday.

He said while South Africa’s economic conditions appear to have improved, the longer-term outlook mirrors the uncertainty of the global environment.

“Prices for commodity exports continue to weaken. In addition, energy supply remains unreliable and stronger El Nino conditions threaten the agricultural outlook. For 2023, the Bank’s forecast for South Africa’s GDP growth is slightly higher than in May, at 0.4% (from 0.3%).

“Energy and logistical constraints remain binding on the growth outlook, limiting economic activity and increasing costs. From a demand perspective, spending by firms, households, public corporations and general government remains positive in real terms. Disposable income of households continues to grow, albeit slowly. Investment by the private and public sectors is revised up and the terms of trade has remained more beneficial than previously forecast,” Kganyago said.

By allAfrica

https://allafrica.com/stories/202307210045.html