South African Reserve Bank Governor Lesetja Kganyago listens during an interview. PHOTO: SABCNEWS

THE South African Reserve Bank (SARB) Governor Lesetja Kganyago has announced that the repo rate will remain unchanged at 3.5%, meaning that there is no increase in interest rates at this stage.

Kganyago made the announcement during a virtual media briefing.

He said the decision of the bank’s Monetary Policy Committee (MPC) was unanimous.

He said despite steady improvements in vaccination rates, stronger confidence and better global economic growth, the COVID-19 virus continues to weigh on global prospects.

“Vaccination rates are lagging in many emerging markets and developing countries. Until populations develop sufficient immunity to curb virus transmission, waves of infection are likely to continue,” said Kganyago.

“As indicated by South Africa’s public health authorities, a third wave of virus infection is currently peaking. Additionally, by raising uncertainty and reducing investor confidence, the recent unrest in parts of the country is likely to slow our ongoing recovery.”

Kganyago said while domestic economy grew by 4.6% in the first quarter of 2021, the MPC estimated the unrest to have fully negated the better growth results from the first quarter, resulting in an unchanged estimate of 4.2% for growth in 2021.

Acting Minister in the Presidency Khumbudzo Ntshavheni said government welcomed the decision of the monetary committee of the Reserve Bank to keep the repo rate unchanged at 3.5%, implying that fears on the inflation on food and non-alcoholic beverages by some analysts may have no basis.

Ntshavheni said SA businesses in their engagements with President Cyril Ramaphosa have committed themselves to prioritise the rebuilding of SA and the eradication of hunger and poverty.

The decision to keep the repo rate unchanged goes a long way for all to play their part, she said.

Last month,Cosatu said that struggling consumers and businesses needed every bit of relief.

The trade union federation urged the South African Reserve Bank to lower the repo rate by 50 basis points.

This after Stats SA said that the economy grew by 1.1% in the first three months of this year.

Stats SA said the economy was still 2.7% smaller than it was in the fourth quarter of 2020.

Cosatu said that poor economic growth figures reflected the slow pace with which both the government and business were moving to meet their commitments under the economic recovery and reconstruction plan.

Cosatu also said that the government must ratchet up its investment and infrastructure drives to create jobs. It warned that continuing job losses and the rising cost of living were a recipe for disaster.

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