The bank has now kept the repo rate at a record low 3.5% for the last five meetings in a row, resisting pressure to match lending rate increases by other emerging market central banks.
The South African Reserve Bank (Sarb) kept lending rates unchanged in a unanimous decision at its July policy meeting on Thursday, which is welcome news for cash-starved consumers – but Governor Lesetja Kganyago warned that the bank would probably have to increase rates soon as inflation risks mounted.
The bank has now kept the repo rate at a record low 3.5% for the last five meetings in a row, resisting pressure to match lending rate increases by other emerging market central banks in Brazil, India and Russia, to preempt likely rate increases in the US where quickening inflation has fuelled investor bets of a closing of the quantitative easing taps.
Sarb’s decision was expected, with attention less on what Kganyago and the four other Monetary Policy Committee (MPC) members said, and more on “how” they said it. That the decision was unanimous will signal that the door on a 300 basis points cutting cycle that began in March last year is well and truly shut. The…