SARB’s Monetary Policy Committee keeps repo rate at 7%
South African Reserve Bank Governor Lesetja Kganyago says interest rates have been left unchanged.
Kganyago says four members of the Monetary Policy Committee voted to keep the repo rate at 7 percent while two preferred to cut it by 25 basis points.
He said a resilient global economy, lower interest rates in the US and UK, a weaker dollar, and stable oil prices are supportive for emerging markets like South Africa.
"However, while the cyclical factors mean global conditions are currently favourable, there are also more adverse structural developments, which are likely to prove challenging. Long-term interest rates have shifted higher in several major economies. This reflects a range of pressures, especially high and rising debt levels, as well as inflation risks."
He said South Africa’s economy grew at its fastest pace in two years last quarter, leading the Bank to revise its growth forecast for 2025 up from 0.9% to 1.2%.
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Kganyago added that rates have already been cut by 125 basis points since last September.
"We want to see how this is affecting the economy, how expectations evolve, and how inflation risks are resolved.
"The forecast has rates easing gradually as inflation returns to the bottom end of the 3-6% target range. The MPC emphasises that stabilising inflation at 3%, rather than 4.5%, implies a lower longer-term level for the policy rate.
"That said, the rate path from the Quarterly Projection Model remains a broad policy guide. As usual, our decisions will be taken on a meeting-by-meeting basis, with careful attention to the outlook, data outcomes, and the balance of risks to the forecast."
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