The South African Reserve Bank (SARB) has kept its key repo rate at 8.25%, the highest level since 2009, as it continues to battle rising inflation pressures.
The decision was unanimous among the five members of the Monetary Policy Committee (MPC), and in line with market expectations.
SARB Governor Lesetja Kganyago said that there was no clear disinflation trend yet, and that the inflation risks remained elevated. He also said the bank aimed to firmly anchor inflation expectations around the target midpoint of 4.5%, and enhance confidence in achieving the inflation goal.
The bank’s inflation forecast was revised slightly down to 5.8% for 2023, and 5% for 2024, but still above the target range of 3% to 6%. The projection indicated stability at 4.5% for both 2025 and 2026.
Kganyago said the domestic growth outlook was balanced, but faced several constraints, such as electricity shortages, port and rail disruptions, and policy uncertainty.
The bank’s decision came amid a global trend of monetary tightening, as several central banks have raised or signaled to raise interest rates in response to surging inflation.
The SARB has left its repo rate unchanged since July 2023, when it hiked it by 25 basis points to 8.25%, following a 50 basis point increase in May 2023.
The next MPC meeting is scheduled for March 27, 2024.
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