The South African Reserve Bank leaves interest rates unchanged as consumer inflation remains contained

SOUTH AFRICA - Report 28 Mar 2019 by Iraj Abedian

The South African Reserve Bank’s Monetary Policy Committee concluded its three-day March meeting today with Reserve Bank Governor Lesetja Kganyago’s announcement that the Reserve Bank would be keeping the benchmark interest rate at 6.75%. This means the prime interest rate will also remain at 10.25%.

The last change to the repo was made at the MPC’s November 2018 meeting, when the interest rate was increased by 25 basis points. The hike, the second of the two changes to the repo in 2018 (following the interest rate cut in March) had subsequently placed the repo rate back at 6.75%, the same rate that prevailed at the start of 2018. The Governor had stated that decision was due to the risks of inflation on the upside and he gave a number of reasons for this assessment that basically indicated that the supply side of the economy was the principal driver of inflation, with limited pressure from the demand side.

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