The South African Reserve Bank’s Monetary Policy Committee (MPC) has decided to keep the repo rate steady at 6.75% this week, central bank governor Lesetja Kganyago announced on Thursday afternoon. Kganyago announced the first MPC determination of the repo rate for the year in Pretoria. The announcement comes as inflation continues to move around the committee’s new official inflation target of 3% and after an average CPI print of 32% for 2025.
“The MPC decided to keep the policy rate unchanged at 6.75%. Two members favoured a cut of 25 basis points, while four preferred a hold. The quarterly projection model continues to forecast gradual rate cuts as inflation subsides.
The model interprets the policy stance as moderately restrictive currently, with rates reaching mutual levels during 2027.” He said that after a year of uncertainty in 2025, 2026 started with a fresh round of shocks. He said goods inflation was declining, but services inflation remained high. Risks to the inflation outlook were assessed as balanced.
Read Full Article on TimesLIVE
[paywall]
“[The year] 2025 was a watershed year for the South African economy. Despite a volatile global backdrop, there was significant progress on domestic reforms, including a new inflation target. These efforts have been rewarded with lower borrowing costs, a rapid decline in inflation expectations, and steadier growth.
It is crucial to sustain this progress.” He said while inflation was moving towards the MPC’s targets, with inflation expectations falling, the central bank would pay attention to food inflation, which is under pressure due to the recent foot-and-mouth outbreak, and electricity prices. “Growth looks steadier. The economy has expanded for four consecutive quarters, and available data suggest it grew further in the most recent quarter.
This would mark the longest unbroken growth rate since 2018.” On the growth front, Kganyago said growth is projected by the central bank to approach 2% over the medium term, with upside risks to the projections. “Investment has been weak, contracting during the first half of 2025. However, the third quarter data showed a rebound. We hope that this investment recovery will be sustained, allowing the economy to achieve structurally higher growth.”
[/paywall]
