Johannesburg – The South African Reserve Bank (Sarb) governor Lesetja Kganyago has announced the latest decision on interest rates for the country.
The decision follows the three-day meeting of the Sarb’s Monetary Policy Committee (MPC) which Kganyago chairs.
Kganyago announced that the MPC decided not to make a change to the country’s interest rates.
This means that the repo rate will remain at 3.5% per annnum.
Last year, the MPC cut the repo rate by 25 basis points, which took the repo rate to 3.50% per annum.
This means that the prime lending rate in South Africa will remain at 7%.
Kganyago announced, “The MPC decided to keep rates unchanged at 3.5% per annum. The decision was unanimous. The implied policy rate path of the Quarterly Projection Model (QPM) indicates an increase of 25 basis points in each of the second and fourth quarters of 2021. Compared to the previous meeting, the shift in the rate path from the third to the fourth quarter is due to somewhat lower inflation in 2022.”
Kganyago said during his announcement, “Despite further expected waves, the start of vaccinations in many countries has lifted projections for global economic growth and boosted confidence. We have therefore revised global growth higher to 5.8% in 2021 (from 5%), 3.7% in 2022 (from 3.8%), and 3.3% (from 3.4%) in 2023.”
“Sharply lower public and private investment last year and continued weakness in 2021 will weigh on growth prospects. Domestic GDP is expected to grow by 3.8% in 2021 (Jan: 3.6%), and unchanged from Jan meeting in 2022 and 2023 at 2.4% and 2.5% respectively,” he added.
“Despite generally favourable global conditions and considerable rand appreciation through the latter half of 2020 and into this year, the rand remains below its estimated long-run equilibrium value. The implied starting point for the rand forecast is R14.96/$US (Jan: R15.70/$US),” the SA Reserve Bank governor said.
Consumer Price Inflation:
The Bank’s headline consumer price inflation forecast has been revised higher for 2021 to 4.3% (from 4%), lower for 2022 at 4.4% (from 4.5%), and 4.5% for 2023. The core inflation forecast for 2021 is slightly lower at 3.3% (from 3.4%) & unchanged for 22' and 23' at 4.0% and 4.3% pic.twitter.com/jTgfjv7sas
— SA Reserve Bank (@SAReserveBank) March 25, 2021
The overall risks to the inflation outlook appear to be balanced. Local food price inflation lower despite global highs; Medical services inflation remains low, but likely temporarily; Appreciated currency and muted pass-through to moderate inflation pressure. #SARBMPCMAR21 pic.twitter.com/Z0Kf66bIZE
— SA Reserve Bank (@SAReserveBank) March 25, 2021
The Monetary Policy Committee decision: #SARBMPCMAR21 pic.twitter.com/4wlnROtoFy
— SA Reserve Bank (@SAReserveBank) March 25, 2021
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