In an unanimous decision, the Reserve Bank announced on Thursday that it would maintain the repurchase rate at its current level of 8.25%.
The move marks the third consecutive time that the central bank has chosen to keep rates unchanged following a series of aggressive hikes since 2021.
During a media briefing on Thursday, Reserve Bank governor Lesetja Kganyago said despite the latest consumer price inflation reading for October reaching a five-month high at 5.9%, the bank’s monetary policy committee has opted to hold fire.
According to Statistics South Africa, a surge in inflation which was announced on Wednesday can be attributed to higher fuel prices and poultry challenges that led to panic-buying in the past few weeks.
Kganyago, while delivering a broadly expected decision, indicated that an interest rate cut might only be considered in the second quarter of 2024 or later.
He emphasised the persistently high risks to the country’s inflation, particularly with food inflation ticking higher in October, stating that a decision to keep interest rates unchanged aligns with the central bank’s commitment to address inflationary pressures.
“At the current repurchase rate level, policy is restrictive, consistent with the inflation outlook and elevated inflation expectations,” said Kganyago.
Consumers warned
FNB CEO Jacques Celliers responded to the announcement by acknowledging relief for consumers during the upcoming holiday season.
He cautioned consumers to monitor their financial needs in January, as the prospect of lower rates in 2024 may impact spending patterns.
“While many factors indicated the possibility of a rate hike today, the Reserve Bank’s decision to hold their key lending rate provides some relief after a challenging year,” said Celliers.
“However, the bank’s decision aligns with traditionally high spending during Black Friday and the holiday season.
“I urge consumers to keep an eye on their financial needs in January next year, as we go into this higher spending period.
“With inflation now stabilising and even declining around the world, consumers and businesses should be aware that salary adjustments will follow a similar pattern.
“The prospect of lower rates in 2024 should not generate a strong reaction from borrowers.”
