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Sarb keeps interest rates unchanged

This comes after the central bank’s MPC upped rates by 25 basis points in July.

South African Reserve Bank governor Lesetja Kganyago. Picture: AFP.

JOHANNESBURG - South African Reserve Bank (Sarb) governor Lesetja Kganyago on Wednesday announced interest rates will remain unchanged.

He made the revelation in Pretoria following a two-day meeting of the bank's Monetary Policy Committee (MPC).

"The MPC has decided unanimously to keep the repurchase rate unchanged, for now, at 6 percent per annum."

This means the repo rate, which is the rate at which the central bank lends money to banks, will stay on hold at 6%. The prime lending rate, which is the interest charged by banks to clients, will stay fixed at 9.5%.

Most analysts expected the bank to keep rates on hold.

The MPC in July upped the rates by 25 basis points, citing increasing inflationary pressure and a possible hike by the US Federal Reserve, which didn't materialise during its September meeting.

This move was described by many economists as premature and problematic, especially in light of South Africa's shrinking economy.

A drop in inflation to 4.6 percent for August from 5 percent the previous month has been one of the deciding factors.

This is a relief for South Africans already facing debt, but not for currency investors who want to see better returns.