Natalie Greve
1 minute read
21 Jul 2016
4:19 pm

Repo rate remains unchanged at 7%

Natalie Greve

Inflation is now expected to average 6.6% in 2016 and 6% in 2017.

Reserve Bank governor Lesetja Kganyago. Picture: GCIS/SAPA

While noting concerns about the country’s overall inflation trajectory, the SA Reserve Bank’s (Sarb’s) monetary policy committee (MPC) has unanimously decided to keep the repurchase (repo) rate unchanged, at 7% a year.

Citing reasons for the decision, Sarb governer Lesetja Kganyago said yesterday that the assessment of the balance of risks to the inflation outlook and the weak domestic economy has provided some room to delay further tightening of the monetary policy stance – for now.

“However, the MPC is aware that some of the favourable factors that contributed to this decision could reverse quickly, and remains ready to react appropriately to any significant change in the inflation outlook,” he told reporters during a media briefing.

Kganyago’s announcement was in line with earlier predictions by independent economist Dawie Roodt, who said the sluggish economy and the latest unemployment figures, coupled with the uncertainty in the world economy brought about by Brexit, would likely sway Sarb to keep the rate stable.

Fellow economist Neil Roets believed the repo rate’s stay of execution would help deeply indebted consumers to ease their debt burden.

He further predicted that the decision by the MPC was probably an indication that the rate would remain fixed for the rest of the year.