South Africa: Sarb Holds Rates As Expected, Despite Dismal Growth Outlook


The SA Reserve Bank did as expected and held its key lending rate steady at 6.5%. The economic growth outlook is dire and inflation remains relatively subdued, but the central bank does not want to take any risks in a volatile domestic and global economic environment.

The South African Reserve Bank (SARB) seldom springs a surprise, and it did not disappoint on that score on Thursday 19 September when its Monetary Policy Committee (MPC) did exactly as expected and held its key lending rate steady at 6.5%. For consumers that means the prime rate remains in double-digit territory at 10%.

The statement was terse even by MPC standards and Governor Lesetja Kganyago, like a broken record, repeated his now trademark plea for the government to get on with the pressing business of structural reforms.

"Implementation of prudent macroeconomic policies and structural reforms that lower costs, and raise investment and potential growth, remains urgent," he said.

Revealingly, the MPC rates decision was unanimous, which suggests that any divisions that exist between hawks (who favour tighter policy) and doves (who favour looser policy) are perhaps not all that pronounced.

"Even doves are not cut nutters here and can pause and are not...

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