South African Reserve Bank keeps repo rate unchanged at 7%
This was announced by Reserve Bank Governor, Lesetja Kganyago on Thursday.
The prime lending rate will also stay steady at 10.50%.
“Four members preferred a hold, while two favoured an increase of 25 basis points.
“The committee agreed that the outlook is uncertain, and with the rate increase at our previous meeting, the policy stance is appropriate for now, with rates somewhat restrictive,” Kganyago said.
Turning to growth, the Governor said that while first quarter growth stood “stronger than expected”, the MPC expects sluggish growth through the second and third quarter.
“Consumer confidence has fallen sharply, and business confidence has also weakened. Sectoral data show generally lower activity, since the start of the war. Prices for our export commodities have also fallen, although terms of trade are better, given lower prices for imports.
“We started this year with good momentum, but households have suffered from higher fuel prices, while uncertainty has weighed on investment. It is also increasingly clear that municipal dysfunction has become a binding constraint on growth,” he said.
Kganyago added however that domestic reforms can propel the economy toward a “rising growth trend, as global conditions stabilise”.
“Our baseline forecast is that the economy starts to recover in the second half of this year, as the shock fades. But the outlook is uncertain. We see downside risks to growth,” he noted.
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