Reserve Bank pauses rates for fourth meeting in a row

Lesetja Kganyago

The South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) voted to pause the interest rate hiking cycle for its fourth meeting in a row.

This decision means the repo rate will remain at 8.25% while the prime lending rate stands at 11.75%.

The decision was unanimous, as all members of the MPC preferred to keep the rate on hold.

The Reserve Bank has been attempting to bring inflation down and within its target range of 3% to 6% since the hiking cycle started in November 2021.

Its efforts started to yield results in the second quarter of the year, with inflation cooling since April and reaching an almost two-year low in June.

South Africa’s annual consumer price inflation (CPI) reached 5.4% in June – the lowest it has been since October 2021. This was also the first time it had been within the SARB’s target range since April 2022.

Inflation continued to cool in July, reaching a two-year low of 4.7%. However, inflation rose for the first time in months in August, when CPI marginally increased to 4.8%.

This upward trend continued in September and October, when inflation jumped to 5.4% and 5.9%, respectively.

However, inflation is on a downward trend again, as it dropped to 5.5% in November and 5.1% in December. These decreases were largely driven by fuel price cuts.

Today’s decision to pause aligns with expert expectations, as most believed the MPC would keep the repo rate unchanged.

However, this is not necessarily the end of the hiking cycle, as SARB Governor Lesetja Kganyago has repeatedly warned.

In an interview earlier this month, the governor said the MPC would like to see inflation come down sustainably to the mid-point of its target – 4.5% – before interest rate cuts will be considered.

Many experts believe this will happen in the second half of this year and after the US Federal Reserve has started to cut its interest rates.


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