Sun. Sep 15th, 2019

Monetary Policy Committee keeps repo rate unchanged

Inflation outlooks have encouraged the MPC to keep the repo rate unchanged.

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The South African Reserve Bank (SARB) Governor Lesetja Kganyago has announced that the Monetary Policy Committee (MPC) has maintained the repurchase(repo) rate at 6.75%.

Why the MPC kept the repo rate unchanged

Addressing reporters on Thursday, Kganyago said the MPC had reached the decision after assessing overall risks to the inflation outlook to be more or less evenly balanced.

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“The MPC decided to keep the repurchase rate unchanged at 6.75% per year. Three members preferred to keep rates on hold and two members preferred a cut of 25 basis points. The Committee assesses the stance of monetary policy to be broadly accommodative over the forecast period.

“The implied path of policy rates generated by the Quarterly Projection Model is for one cut of 25 basis points to the repo rate by the end of first quarter of 2020.

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“The endogenous interest rate path is built into the growth and inflation forecast. As emphasized previously, the implied path remains a broad policy guide which could change in either direction from meeting to meeting in response to new developments and changing risks,” he said.

“These are positive developments” – Kganyago

The MPC welcomed the continued downward trend in recent inflation outcomes and moderation in inflation expectations.

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“These are positive developments, as the Committee would like to see inflation remain close to the mid-point of the inflation target range on a more sustained basis.

“While there is scope for further moderation in meat and services prices, oil prices are expected to remain elevated and global food prices appear to have bottomed out. Electricity and water prices, among other administered prices, present additional upside risks,” Kganyago said. 

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