S/Africa's repo rate unchanged at 3.5% - Bank

Marco Green
January 23, 2021

The Monetary Policy Committee chose to leave the repo rate unchanged at 3.5 percent, South African Reserve Bank Governor Lesetja Kganyago said in a statement.

Overall, liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $20,120.3 million.

The Reserve Bank said that economic and financial conditions were expected to remain volatile for the foreseeable future. "We have therefore revised global growth for 2021 to be higher", the top banker said.

"This is the backdrop against which the MPC chose to keep rates unchanged at 3.5% per annum", he said.

According to the MPC statement, while the virus continues in new waves, the roll-out of vaccines is expected to boost global growth prospects. This is in line with our expectation of a moderate rebound in SA's GDP growth (around 3.2% y/y this year), from a deep contraction (around -7.2 percent y/y) in 2020.

"Sharply lower public and private investment past year and continued weakness in 2021 will weigh on growth prospects", he said, adding that "new waves of the COVID-19 virus are likely to periodically weigh on economic activity both globally and locally".

The implied policy rate path of the quarterly projection model indicates two increases of 25 basis points in the second of the third quarter of 2021.

Kganyago says the current low interest rate environment is adequate enough to support the economy.

Other reports by Click Lancashire

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