The South African Reserve Bank’s Monetary Policy Committee has opted to keep the repo rate at 3.5%, which means that the prime lending rate stays at 7%.
Reserve Bank Governor Lesetja Kganyago also updated growth forecasts, saying that first quarter GDP growth was likely to fall short of the central bank’s January prediction.
The good news was that they expect growth in the coming quarters to be stronger than expected.
“The economy is expected to grow about 3.8%. Getting back to pre-pandemic output levels will take time.”
A lot depends on the recovery of the global economy, which the bank still believes will be uneven and tied to the pandemic and the global vaccination drive.
Domestically, load shedding remains a major risk to the economy and to the nation’s growth prospects.
“I’ve got no doubt that if we didn’t have load shedding as the economy was emerging from the lockdown, this economy would have been much stronger than it is at the moment. It is for that reason that we highlight the risk to the economic growth outlook as being the certainty of supply.”