JOHANNESBURG - The South African Reserve Bank's (SARB's) monetary policy committee (MPC) announced on Thursday that the repo rate would remain unchanged at 6.75%.
The monetary policy committee (MPC) wrapped up its first meeting of 2018
Reserve Bank governor Lesetja Kganyago noted that this was the first time since the previous meeting of the MPC, that the rand had appreciated by 13.1% against the dollar, by 9.6% against the euro, and by 10.6% to the pound on a trade-weighted basis.
The governer warned that “in the near term, expectations are that the rand will remain sensitive to the general feeling stemming from political developments. "The lingering prospect of a credit-ratings downgrade to sub-investment grade by Moody’s [also] continues to weigh on the longer-term outlook for the rand,” Kganyago said.
Due to the bank's decision, the prime lending rate - the rate which banks start lending to clients at - will be 10.25%.
The bank cut the repo rate by 25 basis points at its MPC meeting in July 2017, in the light of the improved inflation outlook and the deteriorating growth outlook, Kganyago said at the time.
Kganyago warned of political risk and the possibility of a downgrade by rating agency Moody’s could downgrade in February.