South African Reserve Bank Governor Lesetja Kganyago. Picture: Oupa Mokoena/ African News Agency (ANA)
South African Reserve Bank Governor Lesetja Kganyago. Picture: Oupa Mokoena/ African News Agency (ANA)

Repo rate likely to be unchanged at this week’s Monetary Policy Committee meeting

By Edward West Time of article published Sep 20, 2021

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MARKET and economic developments were relatively stable ahead of the SA Reserve Bank Monetary Policy Committee meeting this week, compared with the run-up to the July meeting, and the MPC was expected to leave the repo rate on hold at 3.50 percent, Absa’s economic research unit said on Friday.

“While the ongoing pandemic-related supply chain disruptions and shortages of raw materials seem to be adding to firms’ cost pressures, there is little sign of this percolating up to the level of consumer prices.”

“We and all other 19 analysts polled by Thomson Reuters in September expect the SARB MPC to keep the repo rate on hold,” the bank said.

However, as the economy continued to gradually repair from the pandemic, the SARB would need to withdraw at least some monetary policy support to restore a positive real policy rate.

“The tone of the MPC statement and the Q&A with officials at the end of next week’s meeting may offer some clues about the exact timing of the start of this normalisation. We maintain our forecast that the first hike will come in March 2022, with 50 basis points more in the remainder of 2022,” the bank said.

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