Economists predicted that the Reserve Bank would keep the repo rate unchanged due to geopolitical risks and low economic growth in SA.
The Reserve Bank has decided to keep the repo rate unchanged, as economists expected, despite inflation remaining at 3.2% for the second month in February.
South African Reserve Bank (Sarb) Governor Lesetja Kganyago said on Thursday that four members of the Monetary Policy Committee (MPC) voted to keep the repo rate unchanged at 7.5%, while the other two preferred a cut of 25 basis points.
“The world economy is experiencing extreme levels of uncertainty. Trade tensions have escalated, and longstanding geopolitical relationships are shifting abruptly. In these circumstances, the global economic outlook is unpredictable.
“Germany has set out plans for large investments in security and infrastructure, which are likely to lift European growth. Meanwhile, China has announced new stimulus measures to bolster demand.”
Kganyago pointed out that economic sentiment is volatile in the US, with the year starting with surging stock prices and a stronger dollar.
“However, more recently, the disruptive effects of tariffs and policy uncertainty have come into focus.
“Growth expectations have now slipped, the dollar has weakened, and US stock markets have given up recent gains.
“By contrast, asset prices in other economies have been resilient, with most major currencies strengthening against the dollar.”
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