Consumers can breathe a sigh of relief, after the SA Reserve Bank's Monetary Policy Committee decided to keep the repo rate at its current level of 8.25%.
Reserve Bank Governor Lesetja Kganyago made the announcement on Thursday.
Commercial Banks' prime lending rate would thus remain at 11.75%
Kganyago said the MPC would seek to look through temporary price shocks and focus on potential second round effects and the risks of de-anchoring inflation expectations.
"Guiding inflation back towards the mid-point of the target band reduces the economic costs of high inflation and will achieve lower interest rates in the future.
"While South Africa’s economic conditions appear to have improved, the longer-term outlook mirrors the uncertainty of the global environment. Prices for commodity exports continue to weaken.
"In light of these risks, the Committee remains vigilant and decisions will continue to be data dependent and sensitive to the balance of risks to the outlook," he said.
FNB CEO Jacques Celliers said: "Given similar actions taken by other central banks in certain global markets, maintaining the status quo was a probable option for the SARB. However, a bias towards higher rates remains in many developed markets as central banks are wary of a rebound in inflation during the second half of the year.
"The Reserve Bank is aware that imported inflation and administered prices rather than consumer spending have been driving inflation and is acting with the greatest caution in its monetary policy mandate to maintain price stability."
Dr Andrew Golding, chief executive of the Pam Golding Property group, said with inflation easing to 5.4% in June, significantly down from 6.3% in May and now comfortably within the Reserve Bank’s 3-6% target range, the MPC was well justified in holding the repo rate steady.
“This is indeed encouraging news for existing and aspiring mortgage holders. Consumers, especially those with mortgages and other debt, will no doubt be breathing a collective sigh of relief at the announcement, which hopefully heralds a shift towards a stable repo rate and the start of a downward repo rate cycle in 2024," said Golding.
