South Africa Monetary Policy January 2019

South Africa

South Africa: SARB holds fire in January

January 17, 2019

At its meeting ending 17 January, the Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB) kept the repurchase rate unchanged at 6.75%. The decision, which was widely expected by analysts, was unanimous among policymakers.

Driving the call to hold off were the SARB’s updated inflation forecasts, which were revised downwardly in recent weeks and now see it averaging 4.8% this year (previously reported: 5.5%) on lower fuel costs over the coming months. Moreover, the SARB now projects a narrower depreciation of the rand over the short-term in line with the slower normalization of monetary policy abroad—and, crucially, in the United States. Meanwhile, fundamentals remain sluggish and, although the global economic backdrop is expected to remain favorable, the SARB’s growth forecasts for the year were consequently cut to 1.7% (previously reported: 1.9%).

In the absence of emerging-market (EM) turmoil, policymakers struck a more dovish tone at their first meeting of the year. In line with the projected containment of inflationary pressures, their current models now see only one 25-basis-point hike before end-2021. All told, most FocusEconomics panelists discount the MPC’s assurances; instead, most see at least a couple of rate hikes over the next few years amid continued financial-market calamity.

The MPC’s next meeting will be held on 26–28 March.

South Africa Interest Rate Forecast


FocusEconomics panelists participating in the Consensus Forecast see the repurchase rate ending next year at 6.82% and 2020 at 7.00%.


Author:, Economist

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South Africa Monetary Policy Chart


South Africa Monetary Policy January 2019

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


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