Repo Rate Remains The Same
Repo Rate Remains at 6.75%
The Monetary Policy Committee (MPC) has decided to keep the Repo Rate (the rate at which the Reserve Bank loan the other banks money at) the same.
The announcement was not met with surprise, as most economists felt that keeping things stable for the moment was the most likely announcement.
As usual, the MPC have to look ahead and consider both the current and future economic climate when making these decisions.
Risk Factors for the Economy
The Reserve Bank Governor Lesetja Kganyago mentioned that the Rand is going to be sensitive to political influences over the next few months and this is something they will watch closely.
He also mentioned that Moody’s rating (probably a downgrading) will also have a big influence on their future policies.
Positive Economic Factors
The Rand has recently gained value against other currencies and this has, for the most part, had a positive effect on the economy.
Rand to Dollar = 13.1% gain
Rand to Euro = 9.6% gain
Rand to Pound = 10.6% gain
Immediately after the announcement, the Rand made further gains.
Next
The next benchmark event will be the February 21st budget speech by Finance Minister Malusi Gigaba where the Government’s R50 Billion deficit will have to be dealt with along with the recent, vote promoting, free tertiary student education plan. For now, however, those repaying bonds and those with linked rates can sigh a small sigh of relief.