Reserve Bank’s MPC keeps repo rate on hold for now, but warns of storms ahead

The South African Reserve Bank’s Monetary Policy Committee (MPC) has kept the repo rate at 8.25% for a second time, after the Consumer Price Index (CPI) edged up for the first time in five months to 4.8% in August.

Governor Lesetja Kganyago said inflation had eased over the course of the year, but a further slowdown looks less certain and growth forecasts remain muted, while the longer-term economic outlook is clouded by persistent risks, including the negative effects of climate change and ongoing geopolitical tension. 

He warned that the job of tackling inflation is not yet done and that further hikes could be on the cards, as risks to the inflation outlook expand.

The decision was largely in line with economists’ predictions that it would be unchanged, due to the weakening local and global economy, rising fuel, water and electricity prices, a slight uptick in the CPI, and the global geopolitical crisis. DM