South African Reserve Bank Repo Rate Held at 6.75%

September 21, 2017

A 25-basis point cut in the SARB policy interest rate to 6.75% in July was a response to a then-perceived improved inflation outlook and it was the first reduction in many years. The rate had been hiked six times from January 2014 to March 2016 and by 200 basis points in all to 7.0%. At this month’s policy review, the monetary policy committee concluded that the inflation outlook had in fact deteriorated a bit more recently. With three committee members favoring another 25-basis point cut nonetheless, the committee split evenly 3-3 and ultimately decided not to change the stance. A statement was released that concludes, “given the heightened uncertainties in the economy, the MPC felt it would be appropriate to maintain the current monetary policy stance at this stage, and reassess the data and the balance of risks at the next meeting.” Upside inflation risks include the more accommodated policy stance since July and the vulnerability of the rand.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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