Close call as Reserve Bank holds on interest rates

The South African Reserve Bank’s Monetary Policy Committee has elected to hold rates in a tight vote..While the result was in line with economist and analyst expectations, the close call between a hold and another rate hike is reflective of the uncertain conditions South Africa continues to operate in – despite inflation coming down.

“Energy and logistical constraints remain binding on the growth outlook, limiting economic activity and increasing costs.” “Indications are the fight against inflation is not yet done,” Kganyago said. “Load shedding and logistics constraints may also have broader effects on the cost of doing business and the cost of living. Given uncertain fuel and food price inflation, considerable risk still attaches to the forecast for average salaries.”

Therefore, while interest rates are being held, the risks are still there, he said. “Risks to the inflation outlook are assessed to the upside.”

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