Reserve Bank Governor Lesetja Kganyago announces that monetary policy will remain tight for a longer duration to combat persistent inflation in South Africa.
- The central bank’s monetary policy committee has raised the benchmark interest rate by a cumulative 475 basis points over the past 10 meetings to bring inflation back to its target range’s midpoint of 4.5%.
- Despite inflation slowing to a 13-month low of 6.3% in the previous month, it has remained above the Reserve Bank’s target range for a year.
- The current repurchase rate stands at 8.25%, the highest level in 14 years, reflecting the central bank’s efforts to curb inflationary pressures.
- The timing of potential interest rate hikes is uncertain, and it is too early to determine if the MPC will follow the US Federal Reserve in pausing rate increases at the next meeting.
- The duration of tight monetary policy will depend on whether inflation reaches the target range and remains anchored, signaling the need to recalibrate policy.