South Africa holds rates amid inflation risks
The South African Reserve Bank kept its benchmark interest rate unchanged while signaling that borrowing costs are likely to stay higher for longer because of persistent inflation risks.
The monetary policy committee maintained the rate at a 14-year high of 8.25% for a second consecutive meeting, Governor Lesetja Kganyago on Thursday.
That matched the median estimate of 26 economists in a Bloomberg survey and nearly all analysts polled by Reuters had forecast that the rate would be left unchanged.
South Africa’s inflation edged up to 4.8% year-on-year in August from 4.7% in July, remaining well within the central bank’s target range. The monetary policy committee is aiming for inflation sustainably around the midpoint of its target range of 3%-6% before considering rate cuts. As it is, risks to the inflation outlook were assessed to the upside, with a high risk that food prices would pick up later in 2024 while the the absence of sustained increases in energy supply in South Africa means electricity prices continue to present clear inflation risks.