Economists Expect Interest Rate to Remain Unchanged

SA Reserve Bank Governor Lesetja Kganyago. Credit: GCIS.

The South African Reserve Bank is set to announce its decision on interest rates on Thursday afternoon with a number of key factors expected to play a role in the decision.

The Monetary Policy Committee decided to keep the repo rate unchanged at 6.5% in May.

Consumers are already facing a substantial rise in the cost of living with rising fuel prices and increased VAT and bondholders are worried about further financial pressure.

Governor Lesetja Kganyago warned at the MPC’s last rate announcement that rising inflation and a weaker rand were some of the factors that may influence the bank’s decision on whether to raise the repo rate in the future.

Figures released by Stats SA on Wednesday indicated that consumer inflation quickened to 4.6% year-on-year in June from 4.4% in May.

The rand has also weakened substantially, with the Reserve Bank warning that it’s concerned about the local currency.

However, a number of economists have indicated that they expect the rate to remain unchanged.