South African central bank holds main rate amid inflation risks

South Africa's central bank opted to maintain its main lending rate at 8.25%, as announced in a unanimous decision by its monetary policy committee (MPC). This marks the third consecutive meeting in which the bank has held the repo rate steady.

Despite inflation experiencing a notable increase to 5.9% year-on-year in October from 5.4% in September, nearing the upper limit of the central bank's target range of 3%-6%, the bank chose to keep the rates unchanged. Central Bank Governor Lesetja Kganyago, addressing a news conference, expressed concern about the uptick in inflation in October, stating that "serious upside risks" to the inflation outlook persist.

Analysts are projecting a potential interest rate cut by the central bank in early 2024. However, some caution that the bank might delay its easing cycle due to persistent high inflation. The MPC of the South African Reserve Bank has emphasized its preference for inflation to consistently hover around the midpoint of its target range before contemplating any rate adjustments.