The South African Reserve Bank (SARB) governor, Lesetja Kganyago, today announced that the repurchase rate (repo rate) in the country will remain the same.
This means that the repo rate will remain at 8.25% and the prime lending rate at 11.75% in the country.
This comes after the SARB’s Monetary Policy Committee’s (MPC) meeting, which hiked the rate for 10 consecutive meetings since the start of 2022, with South Africans seeing the repo rate rise from 3.75% at the start of January 2022.
The Monetary Policy Committee decided to keep the repurchase rate at its current level of 8.25% per year, with effect from 21 July 2023. #SARBMPCJuly23 pic.twitter.com/W2MXBQGGKZ
— SA Reserve Bank (@SAReserveBank) July 20, 2023
Kganyago said during his briefing, “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. While households and firms exhibit resilience, economic growth has been volatile for some time and highly sensitive to new shocks.”
On GDP, the governor said that growth is slightly higher than it was in May.
“For 2023, the Bank’s forecast for South Africa’s GDP growth is slightly higher than in May, at 0.4% (from 0.3%). Our GDP growth forecast for 2024 and 2025 is unchanged from the previous meeting, at 1.0% and 1.1%, respectively,” he said.
Compared to the previous meeting, fuel price inflation is lower at -3.1% in 2023 (from -2.0%). pic.twitter.com/xW60DwoZgc
— SA Reserve Bank (@SAReserveBank) July 20, 2023
Inflation
“Our food price inflation forecast for 2023 remains high but is revised lower in this meeting to 10.3% (from 10.8%), and up slightly to 5.2% in 2024 (from 5.0%),” Kganyago announced.
He further said, “Risks to the inflation outlook are assessed to the upside. Headline inflation at a global level continues to moderate, but food price inflation remains high and oil markets remain tight.”
“Better monthly outcomes have led to a downward revision in our forecast for core inflation to 5.2% in 2023 (previously 5.3%), 4.9% (from 5.0%) and 4.5% (from 4.6%) in 2024 and 2025, respectively,” the governor said.
On Wednesday, Statistics SA announced that consumer prices in South Africa dramatically retreated to their lowest in 20 months in June, dragged lower by fuel and food prices during the month.
Annual headline inflation cooled to 5.4% in June from 6.3% year-on-year in May, sinking below the upper limit of the SARB’s monetary policy target range.
The rate in June is the lowest reading since October 2021, when the rate was 5.0%, and the last time inflation was below 6% was in April 2022.
On a monthly basis, however, inflation increased by 0.2% in June.
Watch the governor make his announcement below:
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