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[ALERT] Reserve Bank keeps repo rate unchanged at 6.5%

Reserve Bank governor Lesetja Kganyago made the announcement in Pretoria this afternoon.

FILE: Reserve Bank Governor Lesetja Kganyago. Picture: GCIS.

PRETORIA - South African Reserve Bank (Sarb) Governor Lesetja Kganyago has announced that the repo rate will remain unchanged at 6.5%.

The repo rate is the rate at which the central bank lends money to commercial banks.

The prime lending rate, which is the interest charged by banks to clients, will remain at 10%.

Kganyago made the announcement in Pretoria on Thursday afternoon.

“In light of the change in the balance of the risks to the inflation outlook, the MPC [Monetary Policy Commitee] unanimously decided to keep the repurchase rate unchanged at 6.5% per annum. At these levels, the MPC still assesses the stance of monetary policy to be accommodative.”

He says there are risks to the inflation outlook due to the weaker rand and higher oil prices.

Added to this, clarity is needed for electricity tariffs and Kganyago says this could impact on inflation.

The governor says the growth forecast remains the same for this year.

“The bank’s forecast for GDP growth is unchanged at 1.7% for 2018 but has been revised up from 1.5% to 1.7% for 2019.”

He says inflation is set to increase but will be contained.

“As expected, the bottom of the inflation cycle has been reached and the trajectory of headline inflation is forecast to remain within the target range.”

But he has noted that a weaker rand due to overseas pressures, along with rising inflation, may influence the overall forecast.

(Edited by Winnie Theletsane)