SA Reserve Bank expected to keep repo rate unchanged following MPC meeting

The SA Reserve Bank is expected to keep the repo rate unchanged at 6.75% on Thursday afternoon.newsletter hereChanges in the repo rate affect the prime lending rate, which is the rate banks use as a starting point to calculate interest rates for their clients. SARB governor Lesetja Kganyago will announce the benchmark rate call at a media briefing in Pretoria on Thursday afternoon, following a three day meeting of the bank's Monetary Policy Committee .

The bank last hiked rates in November 2018, when the MPC introduced a 25-basis point hike that took the rate to 6.75%. The committee kept rates on hold following scheduled meetings in January and late March.- well within the Reserve Bank's target range of between 3% and 6% - analysts suggest the repo rate is likely to stay unchanged due to concerns about inflationary pressure in the future.

"CPI inflation is projected to average 4.8% year-on-year this year, but is set to rise back towards the upper end of the target range in 2020 on low base factors and high administered price increases - especially electricity," said Kamilla Kaplan of Investec in a note to clients. "As such, the repo rate is likely to remain on hold at 6.75% at this week’s MPC meeting to account for the higher projected inflation over the forecast horizon."

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