South Africa’s repurchase or repo rate will remain at 3.5% for the third quarter, central bank governor Lesetja Kganyago has announced.
The repo rate impacted how much interest consumers paid on their loans – as the repo rate increases, so do interest rates, Kganyago said on Thursday.
The South African Reserve Bank chief said the implied policy quarterly rate path projects an increase of 25 basis points in the fourth quarter of 2021, with hikes expected in 2022 and 2023.
“These repurchase rates reflect a highly accommodative policy stance through the end of the forecast… keeping financial conditions supportive of credit demand as the economy continues to recover,” Kganyago said.
He added: “Better anchored expectations of future inflation could keep interest rates lower for longer and can be realised by achieving a stable public debt level, increasing the supply of energy, moderating administered price inflation and keeping wage inflation low into the recovery.”
Kganyago also announced that the country’s domestic economy grew by 4.2% and 4.7% in the first and second quarter of 2021, respectively.
He explained that these outcomes reflected better sectoral growth performances and robust terms of trade, adding that “commodity prices have been extraordinarily high, sustaining income gains despite somewhat higher oil prices.”
“While more South Africans have re-entered the job market as economic activity resumed, the loss of jobs suggests persistent adjustment and sustained weakness in some sectors,” he said.
NM/jn/APA