President Jacob Zuma has opted for stability and continuity by choosing Lesetja Kganyago to head up the Reserve Bank for the next five years. ?
JOHANNESBURG – The repo rate will stay at 5.75 percent. In line with near-unanimous expectations, the Reserve Bank’s Monetary Policy Committee decided to keep interest rates steady.
This comes a day after the US Federal Reserve Bank also held its benchmark interest rates steady. It is expected that US interest rates will ‘normalise’ to a higher level in the second half of 2015.
Lesetja Kganyago, the Reserve Bank governor noted the positive impact of lower oil prices on the economy. However, this is limited by the effect of load shedding on economic activity.
Consumers, who have been battling with high transport and food costs and tightened access to credit, have received an unexpected windfall in the months leading to this week’s MPC.
Yet many analysts are uncertain about the long term dynamics of the oil price. Kganyago expects the oil price effect to be temporary.
The Reserve Bank adjusted its growth outlook for the economy downwards. It is expected that the economy will grow at 2.2 percent in 2015 and 2.4 percent in 2016 (down from previous forecasts of 2.5 and 2.9 percent respectively).
The next MPC meeting will be held from 24 to 26 March 2015.
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