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The South African Reserve Bank's interest rates remain unchanged

23 September 2021 6:55 PM
Tags:
Sarb
Reserve bank
interest rate

Alexander Forbes Chief Economist Isaah Mhlanga says this year's economic growth of 5.3% will not change the inflation dynamics.

On Thursday, the South African Reserve Bank's monetary policy committee kept the benchmark interest rate at a record low of 3.5 percent. The unanimous decision was in line with market expectations that the bank would hold rates steady.

The Bank of South Africa has kept the repo rate at its lowest level in nearly five decades to assist SA businesses and households in navigating an uneven economic recovery from the pandemic. The decision comes as the US Federal Reserve indicated on Wednesday that it will likely begin withdrawing expansive monetary policy support if the US economy continues to improve.

We expected the same interest rate to remain unchanged, but we've seen quarterly projection models say they have 1.5 business points penciled in for the fourth quarter and each of the next eight quarters.

Isaah Mhlanga, Chief economist - Alexander Forbes

This year's economic growth of 5.3% will not change the inflation dynamics; it will happen in 2022 and 2023.

Isaah Mhlanga, Chief economist - Alexander Forbes

RELATED: Sarb's Kganyago announces repo rate unchanged at 3.5%

We don't have an inflation problem; if it's too high, it's because of global financial conditions, not because South African inflation is high.

Isaah Mhlanga, Chief economist - Alexander Forbes

This is not something we should expect in the very near term; it is a medium to a long-term goal, so we would not expect SARB to try and raise interest rates to achieve 3% even if a national treasury and the custodians or the primary institution that set the inflation target to give the go-ahead.

Isaah Mhlanga, Chief economist - Alexander Forbes

Listen to the full interview below...




23 September 2021 6:55 PM
Tags:
Sarb
Reserve bank
interest rate

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