The decision follows the three-day meeting of the Sarb's Monetary Policy Committee which Kganyago chairs.Earlier this year in July the MPC cut the repo rate by 25 basis points, which took the repo rate to 3.50% per annum.Kganyago said,"The implied policy rate path of the Quarterly Projection Model indicates no further repo rate cuts in the near term, and two rate increases in the third and fourth quarters of 2021.
’’Monetary policy has eased financial conditions and improved the resilience of households and firms to the economic implications of Covid-19. ’’The Bank has taken important steps to ensure adequate liquidity in domestic markets. Regulatory capital relief has also been provided, sustaining lending by financial institutions to households and firms.""Monetary policy however cannot on its own improve the potential growth rate of the economy or reduce fiscal risks.
’’Such steps will enhance the effectiveness of monetary policy and its transmission to the broader economy," Kganyago said. Kganyago said during his speech,"Following the 51% q/q contraction of GDP in Q2, the Bank now forecasts a GDP contraction of 8.2% in 2020, compared to the 7.3% forecast in July. In the outer years, GDP is expected to grow by 3.9% in 2021 and 2.6% in 2022.""Headline Inflation forecast for 2020 is revised lower to 3.3% from the 3.4% previously promulgated in the July meeting. Overall risks to the inflation outlook appear to be balanced," Kganyago said.
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