The Reserve Bank’s Monetary Policy Committee (MPC) has left rates unchanged at 3.5%, Governor Lesetja Kganyago said on Thursday.
South African Reserve Bank Governor Lesetja Kganyago announced that the interest rates will remain as they are, which means the nation’s prime lending rate stays at 7%.
The Bank left its benchmark interest rate unchanged as it judged the risk of a potential future acceleration in inflation outweighed muted price growth at the start of this year.
Kganyago also updated growth forecasts, saying that first quarter GDP growth was likely to fall short of the central bank’s January prediction.
“The economy is expected to grow about 3.8%. Getting back to pre-pandemic output levels will take time.”
A lot depends on the recovery of the global economy, which the bank still believes will be uneven and tied to the pandemic and the global vaccination drive.
Domestically, load shedding remains a major risk to the economy and to the nation’s growth prospects.
“I’ve got no doubt that if we didn’t have load shedding as the economy was emerging from the lockdown, this economy would have been much stronger than it is at the moment. It is for that reason that we highlight the risk to the economic growth outlook as being the certainty of supply.”
The MPC’s decision was in line with the median estimate of 16 analysts surveyed by Bloomberg prior to the decision, all of whom predicted the central bank would hold the rate unchanged as it has since July last year.