Zuko Komisa

In a unanimous vote, the Monetary Policy Committee (MPC) of the South African Reserve Bank has agreed to lower the repo rate by 25 basis points, from 8% to 7.75%, effective Friday.
Following a meeting of the bank’s MPC, Reserve Bank Governor Lesetja Kganyago announced the second straight reduction in the repo rate. Kganyago’s declaration follows Statistics South Africa’s declaration that inflation has dropped to 2.8%, the lowest level since June 2020.
“The committee agreed that reducing the level of policy restrictiveness is still consistent with achieving the inflation target,”
“Global interest rates could well shift higher again and the recent Rand depreciation demonstrates how rapidly changes in the global environment can affect South Africa.
“The forecast sees rates easing further in future, stabilising a bit above 7%. But this rate path from the Quarterly Projection Model remains a broad policy guide. The MPC would like to emphasise that its decisions will be made on a meeting-by-meeting basis, with no forward guidance and no pre-commitment to any specific rate path. Such decisions will continue to be outlook dependent, responsive to data developments, and sensitive to the balance of risks to the forecast,” SA Reserve Bank Governor Lesetja Kganyago
Additionally, this falls short of the 3–6% inflation target range set by the SARB.
Kaya Biz with Guguglethu Mfuphi spoke to Koketso Mano, FNB Senior Economist about the decision.
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