CAPE TOWN: The Reserve Bank’s monetary policy committee (MPC) has left the repo interest rate unchanged at 5.75%, as expected. Although the committee left rates unchanged following its three-day meeting on Thursday, it noted concern over a deteriorating inflation outlook on higher oil prices and a weak rand.
The repo rate was last raised by 25 basis points to 5.75% in July 2014, and has remained the same since then. Economists expect interest rates to rise before year-end and have forecast inflation to be at the upper end of the 3% to 6% target band by September or November.
Announcing the rates decision on Thursday, Mr Kganyago said the bank’s inflation forecast has changed since the previous meeting of the MPC, with inflation now expected to average 4.9% in 2015, with a first-quarter low of 4.1%. A temporary breach of the upper end of the inflation target band was still expected to peak at 6.8% during the first quarter of 2016 and to decline to 6% by the second quarter of 2016. An average inflation rate of 6.1% was forecast for the year.
