JOHANNESBURG, March 27 (Xinhua) — The South African Reserve Bank (SARB), the country’s central bank, announced on Wednesday that it would maintain the current repurchase rate at 8.25 percent despite concerns over elevated inflation expectations.
According to SARB Governor Lesetja Kganyago, keeping the policy rate at this level is considered restrictive and aligns with the inflation outlook and the need to address the heightened inflation expectations in the country.
Recent data from Statistics South Africa revealed that consumer inflation in February increased to 5.6 percent from 5.3 percent in January, with core inflation also rising to 5 percent.
Kganyago explained that the uptick in core inflation was driven by a surge in services, particularly in the medical aid sector, leading to services inflation reaching its highest level since 2019. This indicates a global trend where services, rather than goods, are becoming a significant source of inflation.
Although inflation expectations have somewhat decreased in the latest survey, Kganyago pointed out that expectations for the next two years still remain in the upper half of the target range.
The SARB’s forecast predicts that the South African economy will experience modest growth starting this year as supply-side constraints ease. Kganyago specifically mentioned that they expect the burden of load-shedding to alleviate to some extent.
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