The Reserve Bank’s Monetary Policy Committee has decided to keep the repo- rate unchanged at 3,5 percent.
Reserve Bank Governor Lesetja Kganyago made the announcement in Pretoria on Thursday afternoon.
Full statement below:
He says the Bank also expects inflation to remain low due to a slow economic recovery. The Bank forecast inflation to average 3.2 percent this year. Growth is projected to contract by 8.1 percent this year.
Kganyago says local food inflation will also remain low, “Local food inflation is expected to remain contained, the committee additionally notes a temporary reduction in medical price inflation for next year. Given low pass-through risks to inflation from currency depreciation is expected to remain well contained. However, exchange rate pressure could result from heightened fiscal risks. Electricity and other admin prices remain a concern.”
Reserve Bank repo-rate announcement:
— SA Reserve Bank (@SAReserveBank) November 19, 2020
In July, the Monetary Policy Committee cut the interest rate by 25 basis points to 3.5%. Some economists had expected the central bank to cut by as much as half a percentage point.
The Bank cut rates aggressively in a bid to try and breathe some life into an economy on life support amid the coronavirus lockdown.
The Bank slashed rates by a cumulative 3 percentage points in 2020 and economists said at the time that the Reserve Bank has scope to cut some more.