Reserve bank holds repo rate at 7%

The Reserve Bank’s Monetary Policy Committee (MPC) has voted to keep the repo rate unchanged at 7% following this week’s meeting.

This marks the first pause since July, aligning with some market expectations.

The six-member MPC announced the decision today, noting that while GDP growth has exceeded expectations and the global economy remains resilient, inflation expectations are still likely to remain above the bank’s new preferred target of 3% for the year.

Reserve Bank Governor Lesetja Kganyago said: “Overall, we expect headline inflation to average 3.4% this year, and 3.6% next year, before reverting to 3% during 2027. We assess the risks to the inflation outlook as balanced. Against this backdrop, the MPC decided to keep the policy rate unchanged, at 7%.”

Kganyago confirmed that four MPC members voted to hold rates, while two voted in favour of a 25 basis point cut.

The prime lending rate remains at 10.5%.

“The reasoning of the two members who argued for a rate cut was essentially the same as those who supported keeping rates unchanged. As you heard, we had preferences, we deliberated, and eventually we decided the rates should stay the same,” Kganyago added.