Repo rate stays same

The monetary policy committee has decided to keep rates unchanged at 3.5% per year.

This decision was taken against the backdrop of the slow economic recovery that will help keep inflation below the midpoint of the target range for this year and the next.

“Unless risks outlined earlier materialise, inflation is expected to be well contained in 2021, before rising to around the midpoint in 2022 and 2023,” Lesetja Kganyago, governor of the South African Reserve Bank, said.

However, consumers can steel themselves for projected increases of 25 basis points in the second and third quarters of 2021.

Kganyago said although the virus would continue in new waves, the roll-out of vaccines was expected to boost global growth prospects, generally. Global growth for 2021 was therefore revised higher.

In the third quarter of 2020, the South African economy grew by 66.1% quarter-on-quarter, compared to the Bank’s expected 50.3% growth.

“The growth rate for the full year is now expected to be -7.1%, compared to the contraction of 8.0% expected at the time of the November meeting.

“However, our projection for the fourth quarter of 2020 is expected to be lower than previously forecast,” Kganyago said.