SARB keeps repo rate unchanged once again

The South African Reserve Bank (SARB) governor Lesetja Kganyago.

The South African Reserve Bank (SARB) governor Lesetja Kganyago.

Published Nov 23, 2023


Consumers will breathe a sigh of relief ahead of the festive season as the South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) voted to keep the repurchase rate (repo rate) unchanged for the country.

SARB Governor Lesetja Kganyago announced that the repo rate will remain the same on Thursday.

This means the repo rate is 8.25%, while the prime lending rate stays at 11.75% in South Africa.

This decision follows the trend from the MPC’s previous meeting held in September where the rate was also left unchanged. The governor said that the decision to keep the rate unchanged was unanimous


One of the bank’s main weapons to battle the inflation monster in the country is to hike interest rates. Kganyago said that risks to the inflation outlook are still assessed to the upside.

“As we approach the end of the year, easing headline inflation and modest economic growth remain the dominant global economic trends of this past year. While households and firms exhibit some resilience, economic growth has been volatile and highly sensitive to new shocks. While our baseline inflation forecast has improved, risks to the inflation outlook are still assessed to the upside,” the governor said.

The bank’s decision was in line with wide expectations that the rate would be left unchanged.

Yesterday, it was announced that surging egg prices was one factor that led to a surprise uptick in consumer price inflation (CPI) to 5.9% in October

Statistics South Africa (Stats SA) said yesterday that the annual headline CPI quickened more than expected in October, rising to 5.9% from 5.4% in September and well above the Bloomberg market consensus of 5.6%.

This was the highest inflation rate in five months since 6.3% reached in May, and well above market estimates of 5.5%, verging on the upper limit of the SARB’s target range of 3-6%.

Stats SA said upward pressure came primarily from prices of food and non-alcoholic beverages, transportation, health, restaurants and hotels, as all these categories recorded annual inflation rates above 6.0% in October.

Load shedding and the economy

“While South Africa’s electricity load-shedding has declined, domestic growth in the near term is likely to remain muted. Energy and logistical constraints are still binding on economic activity and generally increase costs. We, however, expect electricity supply to increase gradually over the medium-term, helping to raise our forecast for output growth in 2024, 2025 and 2026,” Kganyago said on Thursday.

On GDP growth, the governor said, “GDP growth for 2023 is revised slightly upward to 0.8% from the September figure of 0.7%. Our GDP growth forecast for 2024 and 2025 is increased from the previous meeting, to 1.2% and 1.3%, respectively, in large part due to an expected decrease in loa shedding.“

Bradd Bendall, Head of Sales of Betterbond, said, “After a year of inflationary pressures and interest rate hikes, we welcome the decision to hold the repo rate steady amid global economic headwinds. We are already seeing encouraging signs of positive shifts, with increased quarter-on-quarter house price inflation in sought-after provinces and home buying activity across all age groups. With consumer price inflation now comfortably within the Reserve Bank’s targets, and an improvement in the employment rate, we’re optimistic that the end of the current rate-hiking cycle is in sight, and we can look forward to lower interest rates in 2024.”

FNB CEO Jacques Celliers said, “While many factors indicated the possibility of a rate hike today, the Reserve Bank’s decision to hold their key lending rate provides some relief after a challenging year. However, the Bank’s decision aligns with traditionally high spending during Black Friday and the holiday season. I urge consumers to keep an eye on their financial needs in January next year as we go into this higher spending period. With inflation now stabilising and even declining around the world, consumers and businesses should be aware that salary adjustments will follow a similar pattern. The prospect of lower rates in 2024 should not generate a strong reaction from borrowers”