The South African Reserve Bank has maintained the repo rate at 8.25%.
The decision, announced by the bank’s governor Lesetja Kganyago on Thursday, marks the second consecutive pause in interest rate adjustments, providing much-need relief to consumers.
The prime rate, therefore, remains at 11.75%. It was, however, not a unanimous decision, said Kganyago.
Three monetary policy committee members voted in favour of the pause, while two others supported an increase.
This division highlights the delicate balancing act faced by policymakers as they grapple with economic challenges and stubborn inflation.
Kganyago said despite the temporary relief, inflation remains a concern.
“At the current repurchase rate level, policy is restrictive, consistent with the inflation outlook and elevated inflation expectation.
“Serious upside risks to the inflation outlook remain. In light of these risks, the committee stands ready to act should risks begin to materialise,” he said.
The bank’s announcement comes on the heels of recent data released by Statistics South Africa which reported a modest uptick in consumer inflation in August.
The rate edged up from 4.7% in July to 4.8%, primarily driven by increased fuel costs and municipal tariff hikes.
Stats SA clarified that the rate for food and non-alcoholic beverages (NAB) declined for a fifth consecutive month, dropping from 9.9% in July to 8% in August.
The data revealed, however, that the increase was partially offset by a cooling trend in food and NAB prices.
Regional disparities were apparent in the rate increases.
Stats SA recorded that Western Cape residents experienced the steepest hike in electricity tariffs and property rates while KwaZulu-Natal registered the highest rise in water charges, followed by Gauteng.
Kganyago said on Thursday: “The trajectory of South Africa’s headline inflation rate has been shaped primarily by fuel and food prices.”
He emphasised that the central bank’s policy stance aims to anchor inflation expectations more firmly around the mid-point of the target band and increase confidence in attaining the inflation target over time.
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