The SA Reserve Bank’s Monetary Policy Committee (MPC) kept the repurchase rate unchanged for a sixth consecutive meeting on Thursday.
Bureau for Economic Research (BER) economists said in their weekly review that the committee’s unanimous decision to keep the repo rate unchanged at 8.25% (with the prime lending rate at 11.75%) was in line with expectations.
“The statement was broadly neutral, with a slight improvement in the inflation outlook. The Sarb now sees CPI inflation reaching its 4.5% objective by the second quarter of next year,” BER economists said.
While this is earlier than the bank’s initial expectation of achieving this goal in late 2025, its average forecast for 2025 is just slightly lower at 4.5% compared to its earlier 4.6% expectation.
“The bank sees the inflation risk as being broadly balanced as opposed to emphasising upside risks in previous meetings but remains concerned about high inflation expectations, especially for price setters, businesses and trade unions. We expect the first rate cut in September,” the economists noted.
According to Stats SA, headline producer price inflation accelerated to 5.1% year-on-year in April from 4.6% in March. This was on the back of a 0.5% month-on-month uptick.
“The acceleration was largely due to fuel inflation, while food price increases were somewhat lower than expected. This could be good news for headline consumer inflation down the line,” the economists said.
