Repo rate remains unchanged at 6.75 percent

The South African Reserve Bank has kept the repo rate unchanged at 6.75 percent

According to Lesetja Kganyago (pictured), South African Reserve Bank (Sarb) governor, five members of the monetary policy committee recently voted to hold rates, while one member voted for a 25 basis point cut. 

Kganyago said at a press briefing:

“While there have been moderate upward revisions to the growth forecast, the outlook remains challenging… In recent weeks, some of the risks to the inflation outlook have dissipated somewhat. The main drivers of the more favourable forecast were the stronger-than-expected exchange rate and lower electricity price assumption.”

The governor added that while inflation is expected to reach a low point below the midpoint of the target range, it is expected to resume an upward trajectory and measure 5.5  percent in the final quarter of next year.

He also said that a further downgrade remains a risk, but that this will depend on “government’s response to the deteriorating fiscal position and commitment to credible growth-enhancing policies”.