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Sarb's tone remains hawkish despite keeping repo rate unchanged

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Households and businesses can breathe a sigh of relief as the South African Reserve Bank (Sarb) opts to keep borrowing costs unchanged for a second consecutive time.

In a tight call, three of the five members of the Monetary Policy Committee voted to keep the repo rate at 8.25%.The reserve bank said growth forecasts remain muted.

The central bank’s estimate for GDP growth is unchanged at 1% for 2024 and 1.1% for the following year. But the longer-term economic outlook is clouded by persistent risks to inflation, the negative effects of climate change and ongoing geopolitical tensions. Reserve Bank Governor Lesetja Kganyago said global monetary policy was likely to remain focused on ensuring inflation continued to retreat.

"Risks to the inflation outlook are assessed to the upside. At a global level, headline inflation continues to moderate, but food price inflationWith the repo rate staying at 8.25%, the prime lending rate of commercial banks remains at 11.75%.

 

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