Repo rate ‘taking a breather’, kept steady at 3.5%
The Reserve Bank has resolved to keep interest rates unchanged.
This is the second consecutive time the central bank has kept rates steady.
The Monetary Policy Committee (MPC) met for the final time in 2020 on Wednesday and Thursday.
Announcing the MPCs decision to hold rates steady, Governor Lesetja Kganyago said the central bank is “taking a breather”.
“Two members of the committee preferred a 25 basis points cut and three preferred to hold rates at the current level.
“The implied policy rate path of the quarterly projection model indicates no further repo rate cuts in the near term and two increases on 25 basis points in the third and fourth quarters of 2021,” he added.
JUST IN: The central bank has resolved to keep the interest rates unchanged. The repurchase rate remains at 3.5% and prime lending rate at 7%. This is the second consecutive time rates were kept constant. #InterestRates pic.twitter.com/n2SWyVd9bM
— Jacaranda News (@JacaNews) November 19, 2020
The central bank spent much of the year making cuts to the interest rates amid the grim economic outlook.
But Kganyago said monetary policy cannot on its own improve the potential growth rate of the economy or reduce fiscal risks.
“We’ve been cutting rates since January this year. We took a breather in September and now. As we said that we will continue to access data and any future decision will be data-dependent.”
The repo rate stands at 3,5% while the prime lending rate is 7%.
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