Lesetja Kganyago, governor of the South African Reserve Bank. The South African Reserve Bank (SARB’s) has opted to keep the repo rate unchanged at 6.75%. The prime lending rate is currently at 10.25%, with the rate having dropped a cumulative 1.25 percentage points since September 2024.
Johann Els, chief economist at PSG Financial Services, said earlier this week that he expectedmore rate cuts this year. Investec chief economist Annabel Bishop noted that financial markets had priced in a 44% probability of a 0.25 percentage point cut occurring in the repo rate on Thursday. A historical view of the South African Reserve Bank’s interest rate decisions.
The MPC meeting comes a day after the US Federal Reserve left that country’s interest rate unchanged, which followed having made three successive cuts of 0.25 percentage points. Bishop said that the cautious approach being taken in the US could be “echoed by South Africa’s monetary policy committee today”. Given that the rate has been cut by a full percentage point over the course of last year, SARB “is likely in no rush to cut further, on balance, but will assess inflationary factors closely,” says Bishop.
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December’s inflation figure– the latest available data – edged somewhat higher to 3.6%, which was up a percentage point on November’s figure. Statistics South Africa’s data showed that housing and utilities remained the largest contributor to annual inflation. Food and non-alcoholic beverages also continued to add upward pressure.
Food inflation remained unchanged at 4.4% year-on-year in December. In November, SARB Governor Lesetja Kganyago said he sees inflation heading lower again from the beginning of this year. “Indeed, recent outcomes have undershot our forecasts slightly,” he said.
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