South Africa Monetary Policy

South Africa

South African Reserve Bank leaves the repo rate unchanged at 5.75%

The Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB) decided to keep the repurchase rate unchanged at 5.75% at its 27 March meeting. The decision met market expectations. The Bank has increased the repo rate twice since last year to fight high inflation.

The SARB acknowledged that the economy remains weak amid energy supply shortages and subdued domestic demand. According to the Bank, economic data from the first months of 2015 will be a cause for concern should the negative trend persist. In January, both real output in mining and manufacturing contracted over the previous month. In addition, employment growth has stagnated and is likely to remain low going forward. Nevertheless, given that there are currently no strikes in the mining sector, the Bank expects the economy to perform slightly better this year relative to last year.

Regarding price developments, inflation fell from 4.4% in February to 3.9% in January. The Committee commented that, “the lower trend in inflation was mainly due to lower petrol prices, but recent oil price and exchange rate developments suggest that this is likely to be the low point for the medium term inflation trajectory.”

Within this setting, FocusEconomics Consensus Forecast panelists expect the repo rate to end this year at 5.92%. For next year, the panel expects the repo rate to end the year at 6.45%.

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South Africa Monetary Policy Chart

SouthAfrica Monetary Policy March 2015

Note: Monetary Policy Rate in %.
Source: South African Reserve Bank (SARB).

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