South African Reserve Bank Keeps Repo Rate Unchanged At 8.25%

The Reserve Bank's Monetary Policy Committee (MPC) announced on Thursday that the repo rate remains unchanged at 8.25%.

Reserve Bank governor Lesetja Kganyago announced this decision after a meeting of the MPC, noting that it was a unanimous decision. He explained that the inflation had turned out to be higher than predicted earlier in the year, which led to a repricing of rate expectations.

"There is still considerable uncertainty about the longer-run inflation outlook, globally. That said, inflation outcomes in the United States have been more benign recently, and markets still see some room for adjustments by the US Federal Reserve this year. We may also see easing by other major central banks," he said, SA News reported.

Kganyago said that South Africa's current inflation rate stands at 5.2%, noting that the exchange rate of the rand has been fluctuating a lot since the last MPC meeting in March.

The Reserve Bank governor noted that the committee is expecting inflation to stabilize at the target of 4.5% by the second quarter of next year. He explained that this is an improvement on the MPC's March forecast, which only reached this milestone at the end of 2025.

"The changes to the outlook, however, are not large when compared to our March forecast. Average inflation for 2025 is only a tenth of a percentage point lower. The task of achieving our inflation objective is not yet done," he added.

The bank has slightly lowered its predictions for food and core inflation in 2024 due to the Consumer Price Index (CPI) releases in March and April were better than anticipated. Fuel price inflation is expected to rise in the short term, but it's predicted to get better in the next year.

He further said that the committee remains concerned that inflation expectations are elevated, adding that "after three years of inflation being above 4.5%, few survey respondents, especially from businesses and trade unions, now believe that inflation will be at 4.5% in two years' time."

Moreover, the MPC also praised the improvement witnessed in electricity supply across the country as there have been no load shedding issues since March 26.