The South African Reserve Bank (SARB) has decided to maintain the repo rate at a 14-year peak of 8.25%, with the prime lending rate currently at 11.75%.
The SARB noted that inflation remains above the desired mid-point of their target, which is 4.5%, with the current rate lingering at 5.2%.
Governor Lesetja Kganyago expressed concerns about South Africa’s economic outlook, noting a lackluster performance in the first half of the year. He emphasized that the fight against inflation is ongoing and stabilization has not yet been achieved in most economies.
“The economy saw a slight contraction of 0.1% in the first quarter. Coupled with last week’s underwhelming mining and manufacturing data, we have slightly lowered our growth forecast for the second quarter to 0.6%,” Kganyago stated.
Economic analysts are forecasting that the SARB might lower rates at least twice by the year’s end.
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