By Thebe Mabanga
The South African Reserve Bank’s Monetary Policy Committee (MPC) is expected to keep interest rates unchanged on Thursday despite August inflation coming in better than expected.
This indicates that Reserve Bank Governor Lesetja Kganyago is likely to continue pushing for lowering the inflation target towards the bottom of the band, even as the National Treasury insists the target remains under review.
“We believe the MPC will leave the repo rate unchanged at this week’s meeting, pausing its easing cycle, which started in September last year,” Nedbank said in a research note issued to investors this week.
“The July meeting was a watershed moment for monetary policy in South Africa, with the MPC taking the initiative to lower its preferred inflation anchor within the existing 3-6% target range from 4.5% to 3%.”
The bank said of Kganyago’s announcement, which it describes as having taken government by surprise.
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