SARB likely to keep repo rate unchanged, predicts economist
Some economists have predicted that the South African Reserve Bank's Monetary Policy Committee is likely to keep the repo rate unchanged.
Reserve Bank Governor Lesetja Kganyago will this afternoon announce changes to the interest rate following the MPC meeting earlier this week.
The country's repo rate currently stands at 8,25%, while prime lending is at 11,75%.
The announcement comes just days after Statistics South Africa announced the latest headline consumer inflation which increased for a second consecutive month to 5,6% in February from 5,3% in January.
The 5.6% increase is closer to the upper limit of the South African Reserve Bank’s inflation target range.
To protect the value of the rand, the SARB uses inflation targeting, which aims to maintain consumer price inflation between 3% and 6%.
Economic Professor at North-West University, Waldo Krugell, believes this was not enough to push the interest rate lower.
"We suspect that they want to see more evidence that the inflation rate is sustainably coming down towards the midpoint of the target band at 4.5% before they start cutting rates. For a typical household this means that the pressure is still on but there is a possibility of up to 3 rate cuts later this year which will relieve pressure on budgets and free up some money for other spending".
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