South African Reserve Bank Keeps Repurchase Rate at 6.00 percent

Johannesburg, South Africa, Capital Markets — The South African Reserve Bank Monetary Policy Committee (MPC) has unanimously decided to keep the repurchase rate unchanged at 6.0 percent, according to statement released by the Lesetja Kganyago, Governor of the South African Reserve Bank.

The statement stated that inflation outlook remains a concern for the Monetary Policy Committee, with the risks to the forecast assessed to be on the upside. Although two breaches of the target are now expected – in the first and fourth quarters of next year – they are 9 expected to be temporary and primarily the result of base effects from lower petrol prices four quarters previously.

“Nevertheless, the Monetary Policy Committee is concerned that the longer-term inflation trajectory remains uncomfortably close to the upper end of the target range, and given the upside risks to inflation, the probability of a more extended breach than currently forecast is relatively high. A sustained breach of the target range has the danger that it could impact negatively on inflation expectations which are currently sticky at the upper end of the target range”.

“Downside risks to the inflation outlook include international oil prices should they be sustained at current levels. In addition, weak domestic demand may continue to  constrain pricing power in the economy. The Committee nevertheless assesses the overall risks to the inflation outlook to be on the upside”.

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