The repurchase rate will remain unchanged at 6.75% per annum, Reserve Bank Governor Lesetja Kganyago announced on Thursday.
“In light of the recent developments and the balance of risks, the MPC [Monetary Policy Committee] has decided that it would be appropriate to maintain the current monetary policy stance at this stage,” the Governor said on Thursday at the announcement of the decision of the Monetary Policy Committee.
Five members of the MPC members preferred an unchanged stance, while one member preferred a 25 basis point reduction.
Kganyago said in recent weeks, some of the risks to the inflation outlook have dissipated somewhat.
“The rand appreciated following the African National Congress (ANC) elective conference. Also, Eskom was granted a lower-than-expected tariff increase. While S&P Global Ratings downgraded South Africa’s long-term local currency sovereign credit rating to sub-investment grade, Moody’s Investors Service (Moody’s) placed the country ratings on review for a downgrade.
“A further downgrade therefore remains a risk, and will depend on government’s response to the deteriorating fiscal position and commitment to credible growth-enhancing policies,” said the Governor.
He said against this more positive backdrop, the inflation forecast has improved despite continued increases in international oil prices.
“Near-term inflation is expected to remain close to the midpoint of the target range. At the same time, domestic growth outcomes have surprised on the upside, in large part due to the recovery in the agricultural sector.
“While there have been moderate upward revisions to the growth forecast, the outlook remains challenging,” he said.
The core inflation forecast remains unchanged at 4.8% for 2017 but has been adjusted down to 4.6% and 5.1% in 2018 and 2019 from 5.1% and 5.3% respectively.
The Reserve Bank has revised its forecast for Gross Domestic Product (GDP) growth up from 0.7% to 0.9% for 2017, while forecasts for 2018 and 2019 have been adjusted to 1.4% and 1.6% respectively, up from 1.2%and 1.5% previously.
New advisor appointed
Earlier this week the Reserve Bank announced that Fundi Tshazibana has been appointed an adviser to the Governors of the South African Reserve Bank. Her appointment will be effective from 19 February 2018.
She will also become the seventh member of the MPC of the Reserve Bank.
Tshazibana has 17 years of experience in public policy analysis and formulation, having worked at the International Monetary Fund (IMF), National Treasury, and the National Energy Regulator of South Africa. – SAnews.gov.za
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