South Africa: Repo Rate Remains Unchanged At 3.5%

19 November 2020

The South African Reserve Bank (SARB) has for the second consecutive cycle kept the repurchase rate unchanged at 3.5% per annum.

SARB Governor Lesetja Kganyago made the announcement on Thursday, following a Monetary Policy Committee (MPC) meeting.

Addressing reporters, Kganyago said the MPC expects economic and financial conditions to remain volatile for the foreseeable future.

"In this highly uncertain environment, policy decisions will continue to be data dependent and sensitive to the balance of risks to the outlook," he said.

The MPC will seek to look through temporary price shocks and focus on second round effects.

He added that, as usual, the repo rate projection from the QPM remains a broad policy guide, changing from meeting to meeting in response to new data and risks.

This is the second time the SARB has not decreased the repo rate since the advent of COVID-19 in the country in March. In that month, the SARB Monetary Policy Committee cut the repo rate by 100 basis. A second 100 basis points cut was announced in April. This was followed by two 25 basis point decrease in May and a further 25 basis point cut in July.

Kganyago said the monetary policy has eased financial conditions and improved the resilience of households and firms to the economic implications of COVID-19 and continues to be accommodative.

"The bank has taken important steps to ensure adequate liquidity in domestic markets. Regulatory capital relief has also been provided, sustaining lending by financial institutions to households and firms," he said.

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