Moneyweb
The South African Reserve Bank (Sarb) kept its benchmark repo rate at 7.5%, following the Monetary Policy Committee (MPC) meeting on Thursday.
This means SA’s prime interest rate for commercial banks stays at 11%.
One of the key reasons for the central bank’s decision to hold off on a rate cut, after three consecutive cuts of 25 basis points each, is the global economic environment.
He said four members of the MPC preferred this action (to hold), while two favoured a cut of 25 basis points.
The protectionist policies of US President Donald Trump which have unleashed trade wars have resulted in the most significant increase in long-term inflation expectations since 1993.
Since taking office in January, Trump has instituted tariffs on America’s competitors, neighbours, and even allies.
Sarb’s move came a day after the US Federal Reserve also decided to hold its benchmark rate steady at its rate-setting Federal Open Market Committee on Wednesday.
In South Africa, the consumer price index (CPI) inflation rate remained steady at 3.2% for February, slightly lower than the 3.4% economists had expected.
This is below the Sarb’s mid-point of its 3% to 6% target range.
However, the MPC believes the balance of risks are to the upside in the context of volatility, a trade war and a possible recession.
