South African Reserve Bank Repo Rate Left Unchanged as Expected at 6.75%

March 28, 2019

Despite a 6+% decline since the prior policy review in January, South Africa’s Monetary Policy Committee decided unanimously to keep the repo rate unchanged at 6.75% after its second scheduled review of 2019. The rate had been raised by 25 basis points at the final 2018 policy meeting four months ago but kept steady after January’s review. November’s hike reversed a 25-basis point cut made in March 2018, and today’s released statement projects that there will likely be one 25-basis point increase sometime later this year. Inflation is currently running slightly below the middle of a 3-6% target range. Global growth has evolved more slowly than officials earlier anticipated, which is good for emerging market economies like South Africa because it implies a slower and shallower pace of monetary policy normalization in key industrial economies. South African growth is seen averaging about 1.7% over the coming 3 years with risks tilted to the downside. Inflation is forecast to rise to a peak of 5.7% in the first quarter of next year but to settle back thereafter and to stay within target throughout the whole forecasting period.

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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