This afternoon, the Monetary Policy Committee of the South African Reserve Bank (‘SARB’) convened its second meeting of the year. In line with economists’ predictions, SARB has again elected to keep the repurchase rate (repo rate) at 8.25% to regulate inflation and facilitate financial stability and economic growth. Accordingly, the prime lending rate of commercial banks remains unchanged at 11.75%.
It marks the fifth consecutive meeting in which SARB has declined to adjust the repo rate, which has increased by a cumulative 475 basis points since November 2021. The announcement comes against an uptick in consumer inflation from 5.3% in January to 5.6% in February – an increase largely attributed to February’s fuel price hike and the sharp rise in medical aid rates. As inflation edges closer to SARB’s upper target, some economists estimate that SARB is unlikely to begin cutting interest rates before July 2024. Given SARB’s prudent approach thus far, other analysts forecast cuts in the third quarter only.
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