Reserve Bank keeps repo rate unchanged at 3.5%

The Reserve Bank has decided to keep the repo rate unchanged at 3.5%, meaning that the prime lending rate remains at 7%.

Reserve Bank Governor Lesetja Kganyago says GDP is expected to grow by 3.9% in 2021 and 2.6% in 2022 after a substantial contraction in 2020 linked to the coronavirus lockdown.

The economy contracted by 51%, annualised, in the second quarter of 2021.

In the video below, Kganyago announces interest rate decision:

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Announcing the outcomes of the Bank’s Monetary Policy Meeting, Kganyago says the rand has depreciated against the US Dollar since January and investor confidence has decreased.

“With a sharp decline in investment potential growth estimates have been lowered resulting in smaller output gaps over the focused period.”

“GDP is expected to grow by 3.9% in 2021 and 2.6% in 2022. The rand has depreciated by 15.8% against the US dollar since January and remains below its estimated long run equilibrium value despite considerable appreciation since June.”

Last week, the Statistician-General of South Africa Risenga Maluleke delivered the worst economic news in a generation, saying the South African economy has collapsed significantly.

The Gross Domestic Product (GDP) shrank an annualised 51% in the three months to June 2020 compared to the first quarter.

The figures are so dire that many have begun to wonder just how concerning the unemployment figures contained in the Quarterly Labour Force Survey due out this month, will be.