South Africa: SA Reserve Bank Likely to Keep Interest Rates On Hold in September Based On Moderate Inflation and Strong Rand

The South African Reserve Bank will almost certainly keep interest rates unchanged when its Monetary Policy Committee meets on 23 September.

The economy this quarter is widely believed to be contracting, unemployment is sky-high, inflation is moderate and the rand is strong.

The South African Reserve Bank (SARB) will almost certainly keep interest rates unchanged when its Monetary Policy Committee (MPC) meets on 23 September. The economy this quarter is widely believed to be contracting, unemployment is sky-high, inflation is moderate and the rand is strong.

“The SARB needs to avoid interest rate hikes this year, even if monetary policy is extremely accommodative, as the economy is still fragile,” Investec chief economist Annabel Bishop was quoted as saying by Finder. com, a global financial comparison platform.

A panel of economists surveyed by Finder.com found that 97% expected the SARB to hold its key repo rate unmoved at 3.5%, which translates into a prime commercial rate of 7.0%. The repo rate is at an historic low and prime is at its lowest in more than five decades after the central bank slashed rates by 300 basis points last year.