The Monetary Policy Committee (MPC) of the SA Reserve Bank (SARB) has decided to reduce the repurchase rate by 25 basis points to 6.5% with effect from 29 March 2018.
At a media briefing this afternoon, the SARB Governor Lesetja Kganyago said that the MPC was of the view that, in light of the improved inflation outlook and the moderation in risks to the forecast, “there was some room to provide further accommodation without undermining the inflation trajectory or the downward trend in inflation expectations.”
He added that four members of the MPC had preferred a reduction while three members had preferred an unchanged stance.
“In this uncertain environment, future policy decisions will be highly data-dependent and sensitive to the assessment of the balance of risks to the outlook,” Kganyago said.
He also stated that the implied path of policy rates generated by the SARB’s Quarterly Projection Model has changed since the previous MPC meeting.
“Whereas previously two to three increases of 25 basis points each by the end of 2019 were indicated, one increase of 25 basis points is now implied. Two further increases are indicated in 2020.
“As emphasised previously, the implied path remains a broad policy guide which can and does change in either direction between meetings in response to new developments and changing risks. Therefore, the MPC does not mechanistically respond to changes in the path.”
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