JOHANNESBURG - South African Reserve Bank (Sarb) Governor Lesetja Kganyago announced today the bank's latest decision on interest rates following the three-day meeting of the monetary policy committee (MPC) which he chairs.
Kganyago announced that Sarb would be keeping interest rates unchanged at a media briefing held today.
Three members of the MPC preferred to keep the repo rate on hold and two preferred a cut of 25 bps.
Kganyago said, "Recent monthly inflation has been lower than the mid-point of the inflation target range, as owners equivalent rent, food and services inflation remain subdued."
Kganyago also said during his briefing that food price inflation continues to surprise to the downside on a monthly basis, and is expected to peak at about 6.1% in the third quarter of 2020.
“While the rand has benefited from improvements in global sentiment, investors remain concerned about domestic growth prospects and fiscal risks,” Kganyago said.
%%%twitter https://twitter.com/KganyagoLesetja?ref_src=twsrc%5Etfw">@KganyagoLesetja pic.twitter.com/w8dilTXNk1
— SA Reserve Bank (@SAReserveBank)
Sarb's MPC met for the last time in 2019 today, and was largely seen keeping benchmark lending rates on hold again at 6.5%, with a weak growth outlook trumping inflation well within the bank’s target of 4.5%, ahead of the decision.
Earlier this year in July, the Reserve Bank cut interest rates for South Africa down to to 6.5% per annum and chose to keep it unchanged in September.
The forecast for core inflation is lower at 4.2% in 2019 (down from 4.3%), at 4.5% in 2020 (down from 4.7%) and remains steady at 4.6% in 2021. pic.twitter.com/8qAndgS689
— SA Reserve Bank (@SAReserveBank) November 21, 2019
The forecast for core inflation is lower at 4.2% in 2019 (down from 4.3%), at 4.5% in 2020 (down from 4.7%) and remains steady at 4.6% in 2021. pic.twitter.com/8qAndgS689
— SA Reserve Bank (@SAReserveBank) November 21, 2019
The forecast of GDP growth for 2019 is revised lower at 0.5% (from 0.6%). The forecasts for 2020 and 2021 have decreased to 1.4% (from 1.5%) and 1.7% (from 1.8%), respectively. pic.twitter.com/NR0PfNeNsC
— SA Reserve Bank (@SAReserveBank) November 21, 2019
WATCH:
%%%twitter https://twitter.com/KganyagoLesetja?ref_src=twsrc%5Etfw">@KganyagoLesetja pic.twitter.com/FT7ckAyKBn
— SA Reserve Bank (@SAReserveBank)
%%%twitter https://twitter.com/KganyagoLesetja?ref_src=twsrc%5Etfw">@KganyagoLesetja pic.twitter.com/6Dh6cPsoQH
— SA Reserve Bank (@SAReserveBank)
After a challenging year for the property market the decision by the MPC to retain the repo rate unchanged at 6.5% and the mortgage rate at 10% is disappointing as we head into the festive season, says Samuel Seeff, chairman of the Seeff Property Group.
"The news that inflation had dipped to a nine-year low of 3.7% (from 4.1% in September) along with a reasonably stable currency should have been enough to motivate a rate cut. The economy and consumers can do with some good news and it would have been a welcome boost as we head into the important retail season," Seeff said.
Seeff says there has been plenty of activity in the market, but largely at the lower price bands.
"This year has been the tale of two markets - the busy low to mid-market to R1.8m (R3m in some areas) boosted by the favourable mortgage lending climate at the one end of the spectrum and the upper-end R10 million-plus market where little to no activity is taking place."