The South African Reserve Bank’s monetary policy committee on Thursday (17 January) voted to keep the repo rate unchanged at 6.75%.
Speaking on the announcement Reserve Bank Governor, Lesetja Kganyago, said that the growth forecast for 2019 is 1.7% and remains unchanged at 2% in 2020.
CPI inflation is now expected to peak at around 5.6%, in the first quarter of 2020.
Core inflation is expected to remain unchanged at 4.3% in 2018 & forecast to average 5.0% in 2019 and 5.1% in 2020, he said.
“The MPC continues to assess the stance of monetary policy to be broadly accommodative.
“Monetary policy actions will continue to focus on anchoring inflation expectations closer to the mid-point of the inflation target,” Kganyago said.
“The approach of the MPC is to look through the first-round effects and focus on the possible second-round effects on supply side shocks. As previously indicated, any future policy adjustments will be data dependent.”
Unchanged rate welcomed
The unchanged rate has broadly been welcomed.
We need stability so that we can get on with rebuilding confidence and the economy, says Samuel Seeff, chairman of the Seeff Property Group.
Seeff said 2019 is a “year of great expectation” and the decision to retain the rate is the right one.
“Although inflation is a concern, it is weighted by the reasonably stable rand, declining fuel price, and Moody’s keeping the sovereign credit rating and outlook stable with a gradual strengthening of institutions and increasing transparency.
“While we look forward to a much improved year, the reality remains a sluggish economy and we therefore simply cannot afford any further shocks for the economy,” he said.