By Ragheema Mclean
The South African Reserve Bank’s (SARB’s) Monetary Policy Committee (MPC) has kept the repo rate unchanged for a third straight meeting. This means that the interest rates that consumers will pay on their credit will remain unchanged for now.
This decision, in tandem with economist forecasts, keeps the repo rate at 8.25%, with the prime lending rate at 11.75%, ensuring stability in the interest rates for consumers, at least for the immediate period.
Speaking on the VOC Breakfast show on Friday, Economist Dawie Roodt, said the outcome was expected among many economists, he added, “especially since we saw an increase in inflation recently.”
Inflation shot up again in October 2023, rising to 5.9% from 5.4% in September – higher than market expectations of between 5.4% and 5.7%.
Stats SA attributed the recent inflation surge primarily to escalated transport expenses and elevated food prices, stemming from panic buying triggered by the bird flu outbreak affecting poultry products.
Roodt explained that although the repo rate remained unchanged, the reserve bank made it very clear that they will act if the inflation rate goes up going forward.
Highlighting a notable aspect of unity within the MPC, Roodt remarked on the unanimity among its members in favour of maintaining the unchanged interest rates.
“Typically, there might be differing opinions among members, with some advocating for rate increases gradually; however, in this instance, a consensus prevailed.”
Looking ahead, he expressed optimism regarding future inflation trends, suggesting a potential decrease in the upcoming months.
“November and December seem promising, indicating a possible slowdown in inflation,” he remarked.
However, Roodt stressed that combating inflation isn’t solely the Reserve Bank’s responsibility.
He underscored the multifaceted nature of inflation, pointing out that issues such as mismanagement within Eskom, problems in transportation services, and challenges with post bank significantly contribute to inflationary pressures.
“It’s crucial to recognize that the Reserve Bank’s fight against inflation requires collaborative efforts beyond monetary policy,” Roodt added.
He said that addressing the underlying issues in various sectors of the economy is imperative to effectively curb inflation and ensure sustainable economic stability.
Photo: Pixabay
