Moneyweb
The South African Reserve Bank (Sarb) decided to keep the repo rate steady at 3.5% on Thursday, following the conclusion of its latest Monetary Policy Committee (MPC) meeting.
This is in-line with the expectations of most economists and market commentators.
The unanimous decision to hold the rate for the fourth consecutive MPC meeting means that the prime lending rate of commercial banks remains at a more than four decade low of 7%.
It comes despite headline Consumer Price Inflation (CPI) slowing to 2.9% year-on-year in February from 3.2% in January, according to data released by Statistics South Africa on Wednesday.
The latest inflation figure is below the bottom end of Sarb’s 3%-6% CPI target. However, rising crude oil and food prices are expected to gain traction in April with a more than R1 hike in petrol forecast.
This, together with continuing Covid-19 uncertainty and increasing prospects of a third wave of infections in the country, has seen Sarb governor Lesetja Kganyago and his fellow MPC members remain cautious on any further repo rate cuts.
In the wake of the Covid-19 pandemic, subsequent lockdowns and financial fallout, the Sarb slashed its repo rate by 300 basis points in total last year.
Sarb‘s first-quarter forecast for economic growth is at -0.2%, down from 1% at January’s MPC meeting.
The governor said overall risks to the inflation outlook appear to be balanced. Local food price inflation is lower despite global highs; medical services inflation remains low, but this is likely temporary.
This article was first published by www.moneyweb.co.za
