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Reserve Bank expected to keep interest rate unchanged

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The Reserve Bank’s Monetary Policy Committee (MPC) is expected to keep the repo rate unchanged at 3,5 percent when it announces its rate decision this afternoon.

The move will leave the prime lending rate at seven percent.

The five members MPC has been deliberating on the weak economic growth and subdued inflation for the past two days.

Stats SA announced yesterday, that Consumer Price Inflation (CPI) edged lower to 2,9 percent in February.

The Bank expects inflation to average four percent and growth at three percent this year. The current low-interest-rate environment will continue to support struggling households and businesses.

Nedbank’s economist Isaac Matshego says, “Core underlying prices are subdued and it’s in line with our view that the SARB will have to keep interest rate flat, throughout 2021 due to subdued inflation and a fragile economic recovery.”

Last year, the SARB cut the repo rate by 300 basis points down to its lowest level in four decades.

The move was one of a number of efforts made by the Bank to mitigate the effects of COVID-19 on consumers.

 

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