JOHANNESBURG - The South African Reserve Bank announced that there will be no changes made to interest rates following their Monetary Policy Committee (MPC) meeting.
The MPC decided to keep the interest rate unchanged at 6.5% and the prime lending rate 10%.
The South Africa Reserve Bank cut its benchmark repo rate, at which it lends to commercial banks, by 25 basis points to 6.5 percent at its last policy meeting in March, saying the risks to the inflation outlook had subsided.
Economists said yesterday that the rise in consumer inflation would force the MPC’s hand after a favourable trend in the early months of 2018 had given it room to lower the repo rate by 25basis points in March.
NKC African Economics analyst Elize Kruger told Business Report yesterday that the MPC would most likely leave interest rates unchanged for a prolonged period.
“The upward trend in consumer inflation will slowly erode consumers’ purchasing power and will partially offset the optimism that took hold of households following recent political developments, the 25basis points drop in interest rates and the generally positive impact of the stronger rand exchange rate on imported prices,” Kruger said.