23 November 2023
Lesetja Kganyago, governor of the Reserve Bank, has announced that the repo rate remains unchanged at 8.25%. Therefore, the prime lending rate stays at 11.75%.
According to Kganyago, the monetary policy committee unanimously agreed to keep the rate unchanged. This is the third successive time the interest rate has been unchanged.
The governor expressed concern about food prices and the movement of fuel prices next year, and he referred to the port crisis and the poor condition of the railway network, which put severe pressure on economic growth.
The Reserve Bank has adjusted its economic growth forecast for the year to 0,8% from 0,7% in September.
Wandile Sihlobo, chief economist at Agbiz, welcomed the bank’s decision to keep the interest rate unchanged, considering clear inflation risks on the horizon.
According to him, farmers need to remain cautious regarding debt. The sector already has significant exposure to debt, with farm debt totalling about R200 billion. The cost of debt remains high.
“Fortunately, agricultural conditions look promising with El Niño expected to strengthen in most regions of the country only around March next year. This makes better farming and income conditions possible and enables farmers to meet their financial obligations,” said Sihlobo.
Kevin Lings, chief economist at Stanlib, said on X (formerly Twitter) that the Reserve Bank made a good decision in the circumstances. However, the bank made it clear that the interest rate will be raised if inflationary pressures worsen.
