South Africa Monetary Policy

South Africa

South Africa: South African Reserve Bank keeps the repo rate unchanged at 6.00%

September 23, 2015

The Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB) decided to keep the repurchase rate unchanged at 6.00% at its 23 September meeting. The Bank hiked the repo rate for the first time this year at its previous meeting in July in an effort to abate inflationary pressures.

The SARB acknowledged that economic growth remains subdued amid electricity supply constraints and low levels of consumer and business confidence. The economy swung to contraction in the second quarter mainly due to a double-digit decrease in agricultural production. The Bank added that, “the agricultural sector remains constrained by the continuing drought, [and], prospects are being negatively affected by weak commodity prices, lower global demand and the risk of industrial action in parts of the sector.” Against this backdrop, the MPC revised down its growth forecast this month. For 2015, it expects GDP to grow 1.5% (previously estimated: +2.0%) before accelerating slightly to a 1.6% increase in 2016 (previously estimated: + 2.1%).

Regarding currency developments, the rand has depreciated significantly since the MPC’s last meeting. The currency has been particularly vulnerable to the volatility in the Chinese equity markets, falling commodity prices and expectations the U.S. interest rate increases beginning. As a result, the depreciation of the rand remains a significant risk factor to the inflation outlook. The Bank’s inflation forecasts were revised marginally over the previous meeting’s projections. The SARB expects inflation to decrease slightly this year and average 4.7% before jumping to 6.7% in 2016 due to a base effect.

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%.


Author:, Senior Economist

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South Africa Monetary Policy Chart


SouthAfrica Monetary Policy September 2015

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


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