Repo rate stays unchanged at 3.5%
The repo rate, the rate at which the central lends money to commercial banks, was cut five times in 2020, reducing it by 300 basis points to stimulate growth and counter the adverse effects of the Covid-19 lockdown.
Picture: iStock
The monetary policy committee of the South African Reserve Bank has again decided to keep rates unchanged at 3.5%.
The last time it changed was in July last year when it was cut by 25 basis points to ease financial hardship and improve the resilience of households and companies to the economic implications of Covid-19.
Economists were surprised when the repo rate was not cut by another 25 basis points in November against the backdrop of slow economic recovery. They also warned then that consumers can steel themselves for projected increases of 25 basis points in the second and third quarters of 2021.
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While lockdown restrictions are now considerably less restrictive, growth in the first quarter of 2021 was expected to remain muted. Reserve Bank governor Lesetja Kganyago in January this year said GDP is expected to grow by 3.6% this year.
He also warned that economic and financial conditions are expected to remain volatile for the foreseeable future.
“In this highly uncertain environment, policy decisions will continue to be data dependent and sensitive to the balance of risks to the outlook,” Kganyago said.
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