The South African Reserve Bank (SARB), the country’s central bank, on Thursday decided to maintain its repurchase rate at the current level of 8.25 percent despite elevated inflation expectations.
“At the current repurchase rate level, (the) policy is restrictive, consistent with the inflation outlook and elevated inflation expectations,” said SARB Governor Lesetja Kganyago when announcing the latest monetary policy.
The policy stance aims to anchor the country’s inflation expectations more firmly around the midpoint of the target band, which is from 3 percent to 6 percent, and increase confidence in attaining the inflation target sustainably over time, he said.
Data from Statistics South Africa showed Wednesday that the country’s annual consumer inflation climbed in October for the third consecutive month to 5.9 percent, verging on the upper limit of the SARB’s inflation target range.
South Africa’s headline inflation for 2023 is revised down slightly from 5.9 percent to 5.8 percent, according to Kganyago.
Serious upside risks to the inflation outlook remain and decisions by the SARB will continue to be data-dependent and sensitive to the balance of risks to the outlook, he said.
Kganyago said the bank’s forecast of South Africa’s growth in gross domestic product for 2023 is revised slightly upward to 0.8 percent from the September rate of 0.7 percent.
“While South Africa’s electricity load-shedding has declined, domestic growth in the near term is likely to remain muted. Energy and logistical constraints are still binding on economic activity and generally increase costs,” he said.