“The Monetary Policy Committee (MPC) felt that there is some room to pause in this tightening cycle and accordingly decided to keep the repurchase rate unchanged for now at 7,0 percent per annum,” Reserve Bank Governor Lesetja Kganyago said.
This is the first time this year that the repo rate has remained the same since the beginning of the year. Previously the repo rate was raised twice.
Speaking during a media briefing, he said five members of the MPC preferred no change, while one member preferred a 25 basis point increase.
“The MPC will not hesitate to act appropriately should the inflation dynamics require a response, within a flexible inflation targeting framework,” Governor Kganyago said.
He said the MPC remains focused on its inflation mandate, but sensitive to the extent possible to the state of the economy.
“The increase in the repo rate at the previous MPC meeting contributed to the improvement in the longer-term inflation forecast, and that move should be seen in conjunction with previous actions in the cycle and the lagged effects of monetary policy,” Governor Kganyago said.
He said the committee remains concerned that inflation expectations remain at uncomfortably high levels.
“Although core inflation has remained relatively contained in recent months, with a lower peak now expected, it is forecast to accelerate and exceed the upper end of the inflation target range for four quarters in response to exchange rate and wage pressures,” Governor Kganyago said.