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Repo rate remains unchanged

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The South African Reserve Bank (SARB) has kept its repurchase (repo) rate unchanged at 3.5 percent per annum for the first time since the start of COVID-19 in March this year.

SARB Governor, Lesetja Kganyago made this announcement at the end of the Monetary Policy Committee (MPC) meeting in Pretoria on the evening of Thursday, 17 September 2020.

Addressing the media, Kganyago said that despite a higher than expected inflation outcome in July and elevated levels of country financing risk, the committee noted that the economic contraction and slow recovery would keep inflation below the midpoint of the target range for this year.

“Barring risks outlined earlier, inflation is expected to be well contained over the medium-term, remaining below but close to the midpoint in 2021 and 2022,” Kganyago said. The COVID-19 pandemic has had major health, social and economic impacts, presenting challenges in forecasting domestic economic activity.

While the SARB anticipates no further repo rate cuts in the near term, it expects two rate increases in the third and fourth quarters of 2021, he added.

In March, the committee cut the repo rate by 100 basis points, and another 100 basis points were cut in April. Moreover, two 25 basis point decreases were announced in May, and a further 25 basis points cut in July, he said.



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