The Reserve Bank’s Monetary Policy Committee (MPC) has unanimously decided to keep the repo rate steady at 8.25%, according to the Reserve Bank Governor Lesetja Kganyago.
“Considering the outlook, the MPC decided to keep the repo rate unchanged at 8.25%,” said Kganyago.
In its statement, the MPC highlighted that earlier in the year, inflation outcomes were worse than anticipated, resulting in a reassessment of rate expectations. Currently, the country’s inflation rate is 5.2%.
“There is still considerable uncertainty about the longer-run inflation outlook, globally. That said, inflation outcomes in the United States have been more benign recently, and markets still see some room for adjustments by the US Federal Reserve this year. We may also see easing by other major central banks,” they announced.
The MPC also noted that the exchange rate of the rand has been particularly volatile since the last meeting. The Reserve Bank has slightly revised its 2024 food and core forecasts due to better-than-expected CPI releases in March and April. While near-term fuel price inflation is expected to be higher, it is projected to improve by 2025.
“The committee remains concerned that inflation expectations are elevated,” stated the MPC. “After three years of inflation being above 4.5%, few survey respondents, especially from businesses and trade unions, now believe that inflation will be at 4.5% in two years.
“Although the MPC assesses the inflation forecast risks to be broadly balanced at present, high inflation expectations require that we deliver on our target sooner rather than later, to re-anchor expectations.”
They did, however, welcome the recent improvement in the supply of power, with no load-shedding in place from 26 March.
Compiled by Warren Hawkins
