Chief economist at ETM Analytics, George Glynos, has expressed disappointment at the announcement of the repo rate remaining unchanged at 6.75%.
Reserve Bank Governor, Lesetja Kganyago, made the announcement in Pretoria on Thursday, following the bank’s first Monetary Policy Committee meeting this year.
The prime lending rate, the figure charged by banks to customers, will remain at 10.25%.
Prior to Thursday’s announcement, several economists anticipated that the Reserve Bank would likely cut interest rates by 25 basis points due to the strong recovery of the rand after the African National Congress national elective conference.
“My frustrations with this bank, and it has been for some time now, I believe there is something not quite right with either the manner with which they are analysing their risks and the manner in which they have been analysing inflation. Because through the course of 2017 they have been revising down their expectation for inflation.”
“The second is that I don’t believe they are on top of the rand calls. I believe that there is a deficiency on that front, because they certainly haven’t anticipated some of the movements that have happened over the course of the past year. It seems like we are almost looking for the problems whenever we sit down and decide on interest rates.”
The Reserve Bank has left the repo rates unchanged at 6.75%, citing some improvement in the inflation outlook.
Reserve Bank governor Lesetja Kganyago also noted some improvement in household consumption among reasons behind keeping rates on hold.
He has, however, warned that risks to the inflation could rise again in the near future.
“The risks to the forecast are still assessed to be on the upset though the degree has subsided. Two main risks featured predominantly in the MPC discussions namely, prospects of a downgrade; the second risk relate to international oil prices.”
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