Sarb governor keeps interest rate the same

Sarb governor keeps interest rate the same

2015-03-26 15:47

Cape Town - Reserve Bank Governor Lesetja Kganyago has announced that the country's repo rate will remain the same at 5.75%.

Kganyago said that rand is expected to remain volatile, but a faster economic growth rate was expected for 2015 at 2.2% and 2.3% for 2016.

SEE: Experts react over interest rate decision - As it happened

"The timing of future interest rate increases will be dependent, as before, on a range of domestic and external factors," Kganyago said in his speech.

"The MPC [Monetary Policy Committee] will remain vigilant and will not hesitate to act in order to maintain the integrity of the inflation targeting framework," he said.

The repo rate has remained the same since September last year, following a 25 basis points increase in July from 5.5%.

"Electricity supply constraint is likely to persist for some time and resulted in downward expectation for output." he said.

According to Kganyago, business confidence has declined to below the neutral level in first quarter of 2015, with decline most marked in manufacturing sector. There was also a decline in the building sector.

"Employment growth has stagnated and is likely to remain low and both retail and wholesale trade sales declined on a month to month basis in January and the outlook remains uncertain," he said.

Inflation likely to rise

Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, says that the decision to keep the rates unchanged will be welcome news for consumers who are already dealing with ongoing rolling blackouts and the increasing cost of living.

He notes that although consumers enjoyed fuel price cuts during the first three months of this year, the fuel price will once again be increased, placing further financial pressure on cash-strapped households.

FNB economist, Alex Smith, said Inflation is likely to be quite high next year and the prospect of interest rate cuts is off the table - it is simply a question of when it will go up again.

"SA is dependent on short term financial flows and when interest rates start rising in US, commodity prices will be impacted," he said.

Seeff chairperson, Samuel Seeff, has welcomed the decision: "while not unexpected in light of the recent announcement that the inflation rate hit a low of 3.9% [down from 4.4% in January and around 6% late last year], the MPC decision is nonetheless welcome in light of the current economic challenges".

"An interest rate hike right now would have been very difficult given that the economy is facing pressure, not least of which, the current electricity crisis," he said.

"While we are aware that the interest rate is artificially low and that an adjustment is needed in light of the necessity for fiscal consolidation, the current economic state simply does not warrant a hike despite the pressure on the rand".

  • John Smith078 - 2015-03-26 15:53

    I badly need some returns on my investments. And so do pensioners. Especially with electricity, fuel and inflation increasing.

      Yob Vas - 2015-03-26 15:57

      this government is in a hole of it's own making, this happens when the dude in charge can't tell the difference between tyranny and democracy.

      John Smith078 - 2015-03-26 16:17

      People should have an incentive to save. Not accumulate more debt.

      WollieVerstege - 2015-03-26 17:12

      If your investment returns are dependent on the interest rate you seriously need to talk to a professional investment manager. All of my investments return well above the prime rate, some even double digits.

  • Thabo Sello Matlali - 2015-03-26 15:58

    Okay as long as it not going to affect us it is fine like that

  • Shelby Anderson - 2015-03-26 15:59

    Wow now we have more money to pay out for eskom increases and for the fuel hikes on the way.

  • Zoltan Pepper - 2015-03-26 16:08

    Yeehaa! Something not going up! Not declining either, but not going up. Yeehaa!

  • Akuku Juju - 2015-03-26 16:09

    What does this mean to loan sharks like me????

      Craig Danford - 2015-03-26 16:18

      Not much I guess

  • Ernie van Biljon - 2015-03-26 16:11

    A private organisation, without the input of the best experts in their field, ruling on the financial future of mostly ignorami!

  • Ernie van Biljon - 2015-03-26 16:11

    A private organisation, without the input of the best experts in their field, ruling on the financial future of mostly ignorami!

  • Craig Danford - 2015-03-26 16:13

    They had to keep it the same at moment, as they put their hands in my pocket already this month with the fuel levy! I'm sure they will try my other pockets later this year. They best be careful this ANC bunch, they have milked this cow dry. But I think Zuma should be milked next as he looks like a fat cat. But we know you don't get much out of a cat. Hahabaha

  • Lodewicus Adriaanse - 2015-03-26 16:45


  • Shubbz Romy - 2015-03-26 16:55

    Interesting how "will not hesitate to act in order to maintain the integrity of the inflation targeting framework," is so disconnected from the people. It's as if to say: "you naughty buggers, behave or else...!" Staying within the framework regardless of all other factors means that when rates increase those who don't currently have have, have even less. Belt tightening does not affect those who make these glib decisions as it does those who are already struggling. People end up losing their homes, have less food on the table or generally suffer even more... The extra cost of the capital is still borne by the poor no matter what. There is something seriously wrong with this system...

      Michael Moolman - 2015-03-26 17:15

      Revolution! And I don't mean that what a flywheel does.

      Ser-etse Moche - 2015-03-27 08:37


  • Walter Kohlhöfer - 2015-03-26 17:23

    First reasonable decision since the budget speech. We need to keep rates low to stimulate growth and compete with other countries

  • Ser-etse Moche - 2015-03-27 08:34

    It saddens me to always hear excuses from SARB why interest rate can't be cut to accommodate the already overloaded consumers. Come 1 April, Fuel goes up by R2.00, Electricity is rising, food prices, and the list is endless.

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