South Africa keeps rates unchanged after unpredictable vote

South Africa’s central bank, South African Reserve Bank (SARB) left borrowing costs unchanged, delivering the widely expected verdict one day after the country witnessed pivotal elections.

The SARB’s monetary policy committee maintained its benchmark interest rate unchanged at a 15-year high of 8.25 per cent for a sixth consecutive meeting, Bloomberg quoted Governor Lesetja Kganyago as saying at a press conference north of Johannesburg on Thursday.

That matched the estimate of all 22 economists in the survey conducted by Bloomberg. They expected that SARB would maintain its stance to help quell price pressures and avoid any influence on the elections, which is shaping up to be the closest in three decades.

“The committee remains concerned that inflation expectations are elevated,” Governor Kganyago noted. “Although the MPC assesses the inflation forecast risks to be broadly balanced at present, high inflation expectations require that we deliver on our target sooner rather than later, to re-anchor expectations.”

The hold decision was backed by all six MPC members, he added.

The South African central bank has been adamant about having inflation back to the midpoint of its 3 per cent to 6 per cent target range, where it prefers to anchor expectations.

Inflation cooled for a second consecutive month to 5.2 per cent in April. It has been above the midpoint for three years. Elevated price pressures have driven officials to start hiking rates in 2021 until they halted the tightening campaign a year ago.