South Africa Monetary Policy May 2021

South Africa

South Africa: SARB on hold in May meeting

May 20, 2021

At its meeting on 20 May, the Monetary Policy Committee of the South African Reserve Bank (SARB) unanimously decided to leave the repurchase rate unchanged at 3.50%, which was in line with market expectations.

The decision to stand pat came against a backdrop of an improving growth outlook and relatively contained, albeit rising, price pressures. Prospects for both the near term and for 2021 as a whole have seemingly improved amid more robust terms of trade and sturdier output across sectors. That said, the recovery appears to be uneven, with some sectors hit harder by the pandemic, while investment remains constrained. Moreover, the road back to pre-pandemic output levels is still long amid a slow vaccine rollout, electricity shortages, policy uncertainty and a looming third wave of the virus. Turning to inflation, although risks are tilted to the upside, largely due to higher prices for food, electricity and oil, price pressures are set to remain contained in 2021, before increasing to around the midpoint of the Bank’s 3.0%–6.0% target band in 2022.

Regarding forward guidance, while monetary policy will continue to support the economic recovery, the SARB reaffirmed it sees two 25 basis-point hikes this year. However, it underlined that policy decisions will be data driven and take into account the balance of risks, thus the projection could change from meeting to meeting.

The next monetary policy meeting is scheduled for 22 July.

FocusEconomics Consensus panelists see the SARB repo rate ending 2021 at 3.62% and 2022 at 4.30%.

Author:, Economist

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South Africa Monetary Policy Chart

South Africa Monetary Policy May 2021 0

Note: Repo rate in %.
Source: South African Reserve Bank (SARB).

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