© Reuters. FILE PHOTO: The logo of South Africa’s central reserve bank is seen during the delivery of a keynote address by South Africa’s central bank governor, Lesetja Kganyago, at the University of the Witwatersrand in Johannesburg, South Africa, November 1, 2022.
By Kopano Gumbi, Nellie Peyton and Tannur Anders
PRETORIA (Reuters) – South Africa’s central bank on Thursday kept its main lending rate unchanged for the first time since late 2021, following 10 consecutive rate hikes.
The decision by the South African Reserve Bank’s (SARB) monetary policy committee (MPC) to keep rates at 8.25% is the first signal that its tightening cycle is nearing an end.
Inflation slowed to 5.4% year-on-year in June from 6.3% in May, data showed on Wednesday, falling within the central bank’s target range of 3%-6% for the first time since April 2022.
At the last meeting in May, the bank had projected growth of 0.3% in 2023. That forecast has been revised up slightly to 0.4%.
“South Africa’s economic conditions appear to have improved,” the bank said in its MPC statement, while cautioning that the longer-term outlook remained uncertain.
Monetary policy is still in restrictive territory as the SARB only expects inflation to come within target sustainably in 2025.
Some economists say the full effects of its interest rate hikes are yet to work their way through the economy.
“It does take four to six quarters for the full impact of monetary policy tightening to take effect,” said independent economist Elize Kruger.
