April 23rd, 2015

Cape Town – Reserve Bank Governor Lesetja Kganyago has announced that the country’s repo rate will remain the same at 5.75%.

Kganyago said that rand is expected to remain volatile, but a faster economic growth rate was expected for 2015 at 2.2% and 2.3% for 2016.

SEE: Experts react over interest rate decision – As it happened

“The timing of future interest rate increases will be dependent, as before, on a range of domestic and external factors,” Kganyago said in his speech.

“The MPC [Monetary Policy Committee] will remain vigilant and will not hesitate to act in order to maintain the integrity of the inflation targeting framework,” he said.

The repo rate has remained the same since September last year, following a 25 basis points increase in July from 5.5%.

“Electricity supply constraint is likely to persist for some time and resulted in downward expectation for output.” he said.

According to Kganyago, business confidence has declined to below the neutral level in first quarter of 2015, with decline most marked in manufacturing sector. There was also a decline in the building sector.

“Employment growth has stagnated and is likely to remain low and both retail and wholesale trade sales declined on a month to month basis in January and the outlook remains uncertain,” he said.

Inflation likely to rise

Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, says that the decision to keep the rates unchanged will be welcome news for consumers who are already dealing with ongoing rolling blackouts and the increasing cost of living.