South Africa’s Central Bank Leaves Benchmark Interest Rate Unchanged at 3.5%

South Africa’s Central Bank on Thursday left its benchmark interest rate at 3.5%.

While holding a briefing, Governor Lesetja Kganyago said of the five members on the panel, three voted to leave the rates unchanged and two preferred a 25 basis-point cut, the same vote split as in September.

The key rate remains at the lowest level since it was introduced in 1998 after a total easing of 300 basis points this year.

He further said while market base expectation for short and medium term inflation has eased slightly, longer term inflation remains higher, which is one of the reasons why policy makers held repo rates.

The South Africa Reserve bank cut its its GDP forecasts for 2021 and 2022, now predicting growth of 3.5% next year, down from 3.9%, and 2.4% in 2022, down from 2.6%.

Governor Lesetja Kganyago, however warned that Monetary policy alone cannot lift the South African economy out of its problems and into its growth potentials. Other structural reforms will be needed.

Lillian Jijingi

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