South Africa’s repo rate remains unchanged

The South African Reserve Bank Governor, Lesetja Kganyago, shared the decision of the Monetary Policy Committee on Thursday, after the Monetary Policy Committee’s latest meeting.

"The decision was unanimous,” Kganyago said.

“At the current repurchase rate level, the policy is restrictive, consistent with the inflation outlook and elevated inflation expectations. Serious upside risks to the inflation outlook remain. In light of these risks, the committee remains vigilant and stands ready to act should risks begin to materialise."

Kganyago said while South Africa's headline inflation rate has increased more gradually than most economies, it remains sensitive to shocks.

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"While volatile in recent weeks, oil prices have increased over the year, and commodity export prices have moderated further. South Africa’s external financing needs will increase as the current account deficit expands from a forecasted 1.3% of GDP this year (from 2.0%) to 2.6% of GDP in 2024 and to 3.5% of GDP in 2025.7 The smaller deficit this year is the result of significantly better than expected trade outcomes in the third quarter.

"The rand weakened over the past year, depreciating by about 9.5% against the US dollar. The lack of sustained economic growth and dependence on commodities is reflected in the high volatility of the currency in response to global risk-on and risk-off episodes. The implied starting point for the rand forecast is R18.76 to the US dollar, compared to R18.45 at the time of the previous meeting."