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Kganyago: Sarb won’t hesitate to increase repo rate

Lesetja Kganyago says inflation has continued to increase and the bank needs to keep the figure within the target range of between 3% to 6%.

FILE: Lesetja Kganyago, Governor South African Reserve Bank (SARB), at the World Economic Forum on Africa 2017 in Durban, South Africa, 2017. Picture: World Economic Forum.

JOHANNESBURG - South Africa Reserve Bank Governor Lesetja Kganyago says the bank will not hesitate to increase the repo rate should inflation continue to climb.

He has announced that the rate will remain unchanged at 6.5% but has cited a number of concerns including a weaker rand and international trade tensions.

Kganyago says inflation has continued to increase and the bank needs to keep the figure within the target range of between 3% to 6%.

“The MPC will continue to be vigilant and will not hesitate to act should there be the second-round effect that takes us significantly away from the mid-point of inflation target range.”

The governor says this year's growth rate has been adjusted downwards due to weaker than expected quarterly figures.

“Following a broad-based contraction of 2.2% in the first quarter and early indications of modest growth in the second quarter, the Sarb’s forecast now indicates a growth rate of 1.2% for 2018 compared to 1.7% previously.”

But he says growth is expected to pick up.

“The forecast for our 2019 is 1.9%, marginally higher than the previous forecast of 1.7%, while the forecast for 2020 is unchanged at 2%.”

(Edited by Winnie Theletsane)