South Africa Keeps Rate at 8.25%
At its latest meeting on Thursday, the South African Reserve Bank retained its repurchase rate at 8.25% per year, as “serious” upside risks to the inflation outlook remain. The rate, which will take effect on Friday, aligns with market expectations.
Three central bank’s monetary policy committee members voted to keep the rate unchanged, while two preferred a 25-basis-point hike.
The South African Reserve Bank left its key repo rate unchanged at 8.25% during its July 2023 meeting, matching market expectations, marking a pause in its tightening cycle, after 10 consecutive rate hikes.
The central bank raised its growth forecast for this year to 0.4% from 0.3% but noticed that energy and logistical constraints remain binding on the growth outlook, limiting economic activity and increasing costs.
Growth forecast for 2024 and 2025 were kept steady at 1% and 1.1%, respectively. At the same time, policymakers expect lower inflation this year at 6%, mainly due to softer food and core prices. SARB Governor Lesetja Kganyago had previously said that extensive rolling electricity blackouts are expected to reduce growth by 2% this year.
Energy and logistical constraints continue to put pressure on the economy and increase costs, Kganyago reiterated. Near-constant breakdowns of South Africa’s aging coal power plants and a lack of money to buy diesel for emergency generators have led to rolling nationwide blackouts of up to 11-and-a-half hours a day, hampering economic growth. #South Africa Keeps Rate at 8.25%
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