South Africa's central bank maintains repo rate at 8.25 pct-Xinhua

South Africa's central bank maintains repo rate at 8.25 pct

Source: Xinhua

Editor: huaxia

2024-05-31 00:10:15

JOHANNESBURG, May 30 (Xinhua) -- The South African Reserve Bank (SARB), the country's central bank, on Thursday decided to keep its repurchase rate unchanged at 8.25 percent for the sixth consecutive time due to the risk of inflation.

Lesetja Kganyago, SARB governor, made this announcement in Pretoria, the country's administrative capital, while briefing the media about the decision of the central bank's monetary policy committee (MPC). He said the decision was unanimous.

"We now see inflation stabilizing at our 4.5 percent objective in the second quarter of next year. This is an improvement on our March forecast, which only reached this milestone at the end of 2025," said Kganyago.

This change in the inflation forecast came after an annual consumer price index (CPI) declined from 5.3 percent in March to 5.2 percent in April. He said the "slightly better than expected" CPI made the central bank's forecast to get to the midpoint of the target band of 3 to 6 percent sooner.

However, "the task of achieving our inflation objective is not yet done," Kganyago stressed. "The committee remains concerned that inflation expectations are elevated. After three years of inflation being above 4.5 percent, few survey respondents, especially from businesses and trade unions, now believe that inflation will be at 4.5 percent in two years' time."

"Although the MPC assesses the inflation forecast risks to be broadly balanced at present, high inflation expectations require that we deliver on our target sooner rather than later, to re-anchor expectations," he said.

As for the economic outlook, Kganyago said the central bank expects slightly weaker first-quarter growth, but this will be offset by better second-quarter growth.

"We still forecast GDP growth of 1.2 percent this year. The growth numbers for the outer years also remain unchanged," he noted.

The central bank governor added that the MPC would like to see some prudent public debt level, improving the functioning of network industries, lowering administered price inflation, and keeping real wage growth in line with productivity gains.