The South African Reserve Bank’s monetary policy committee (MPC) has kept its repurchase (repo) rate unchanged at 6.75% per year, Bank Governor Lesetja Kganyago has said.
Kganyago told reporters on Thursday that this unchanged repo rate has been possible because “average inflation expectations have been declining slowly since the end of 2017.”
The governor said inflation was expected to moderate this year and the apex bank has made it clear that it would prefer to see inflation anchored at the mid-point of its 3%-6% inflation target range.
In April, inflation was below the mid-point, at 4.4%, he said, adding that the bank now expected inflation to average 4.5% this year, down from March’s projection of 4.8%.
Next year it is expected to be 5.1% from 5.3%, and 4.6% in 2021 from 4.7%, the governor added.
“Recent monthly inflation outcomes have remained around the mid-point of the inflation target range, in part due to weak demand and positive inflation surprises.
“The medium-term inflation outlook has moderated slightly,” Kganyago said.
During the meeting, three MPC members preferred to keep rates on hold and two members preferred a cut of 25 basis points.
NM/APA