Repo rate remains unchanged
Updated | By Sibahle Motha
The Reserve Bank's Monetary Policy Committee (MPC) has left the repo rate unchanged at 6.5%.
The announcement was made by South African Reserve Bank (SARB) Governor Lestja Kganyago in Pretoria on Thursday.
At its previous meeting in March the MPC decided to cut interest rates by 25 basis points to make the repo rate 6.5%, and the prime lending rate 10%.
Econometrix economist Dr Azar Jammine says the decision to leave the repo rate unchanged was not unexpected.
"The decision to leave the repo rate unchanged at 6.5% was a no-brainer. In the light of the recent sharp increases in oil prices and the renewed depreciation of the rand associated with increased capital outflows from emerging markets, linked to new fears about a global economic slowdown and higher US interest rates.
"It was obvious that the Reserve Bank would tend to be more cautious and not consider lowering interest rates any further," says Jammine.
He believes interest rates could still rise in the near future.
"On the contrary, the bank suggested that interest rates could rise by 0.5% over the next 18 months and by 1% over the next 2.5 years that is not excessive but it does suggest that the downward trend of the inflation and the interest rate cycle of the past two years is now over."
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