Repo rate remains unchanged

The prime lending rate, which is the figure at which banks lend us money, remains at 10.5 percent.

SARB Governor Lesetja Kganyago says five members preferred an unchanged stance, while one member preferred a 25 basis point reduction.

"The MPC is of the view that we may have reached the end of the tightening cycle. However, the committee would like to see a more sustained improvement in the inflation outlook, before reducing rates," said Kganyago.

Kganyago said growth outlook remains disappointing.

"The MPC is concerned that increased political uncertainty could impact negatively on private sector investment and household consumption expenditure and further undermined employment growth," said Kganyago.

Kganyago added that the rand has depreciated significantly in response to the increased domestic political uncertainty and the exchange rate has re-emerged as an upside risk to the inflation outlook. 

"Since the previous meeting of the MPC, the rand has appreciated by 3.9 percent against the US dollar, by 4 percent against the euro and by 3.4 percent on a trade-weighted basis," said Kganyago.

He said the rand is likely to react further to unfolding developments until a greater degree of certainty and confidence is restored. 

"The possibility of significant overshooting of the exchange rate in the short run also cannot be ruled out. As always, the MPC will attempt to look through short term fluctuations and focus on longer term trends in its policy settings."