Interest Rate in South Africa

South Africa Interest Rate | Economic News & Forecasts

South Africa - Interest Rate

SARB stays put as some policymakers mull rate cut

At its meeting ending 23 May, the Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB) kept the repurchase rate unchanged at 6.75%. The decision, which was widely expected by analysts, was not unanimous, however; two of the five policymakers opted for a 0.25% rate cut.

Driving the call to hold off were the SARB’s inflation forecasts, which were cut since March and now see it averaging 4.5% this year (previously: 4.8%) and 5.1% next year (previously: 5.3%). Meanwhile, downside risks to the economic outlook have been materializing: The economy is expected to have contracted in the first quarter amid mining- and manufacturing-sector woes, and load-shedding appears to continue weighing heavily. Exacerbating matters, the unfolding debt crisis among the state-owned utilities—and especially Eskom—is expected to hinder investment in the near-term. Taken together, however, policymakers argued that these challenges were “structural in nature and cannot be resolved” through monetary policy.

Policymakers continued to strike a dovish tone amid the precarious state of the economy. In line with the projected containment of inflationary pressures, their current models now see only one 25-basis-point hike before early next year. All told, most Met the why particular panelists discount the MPC’s assurances; instead, most do not see a rate hike until late next year.

Taking an off-Consensus view, analysts at Goldman Sachs are increasingly confident that policymakers will cut rates over the short-term. They noted:

“We view the split on the MPC and downward forecast revisions as dovish developments supportive of our baseline expectation that a gradual easing cycle will begin in July. […] However, the appointment of Dr. [Chris] Loewald, who we view as moderately hawkish and broadly aligned with the views of the Governor, though not completely unexpected, represents a somewhat hawkish development.”

The MPC’s next meeting will be held on 16–18 July.


South Africa Interest Rate Forecast


The SARB’s growth forecasts were also revised. Policymakers now see growth at 1.0% (previously: 1.3%) and 1.8% this year and next, respectively. Met the why particular panelists participating in the Consensus Forecast see the repurchase rate ending 2019 at 6.74% and 2020 at 6.90%.

South Africa - Interest Rate Data

2013  2014  2015  2016  2017  
Policy Interest Rate (%)5.00  5.75  6.25  7.00  6.75  

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South Africa Interest Rate Chart


South Africa Interest Rate
Note: SARB Repo Rate %
Source: South African Reserve Bank.

South Africa Facts

ValueChangeDate
Bond Yield8.380.29 %Jun 14
Exchange Rate14.77-0.21 %Jun 14
Stock Market0.7-0.44 %Jun 13

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