More dovish MPC kept repo rate at 3.5%, effect of riots on economic growth limited
25 Jul, 2022


All members of the Monetary Policy Committee (MPC) decided to keep the repo rate unchanged at 3.5%.
The MPC still considers the risks to the consumer price inflation (CPI) outlook to be on the upside.
The South African Reserve Bank’s (SARB) Quarterly Projection Model (QPM) predicts higher average CPI for 2021 and 2023 compared to the May estimate. The estimate for 2022 is lower at 4.2% (4.4 % in May).
The core CPI estimates for 2021 and 2022 were adjusted lower to 2.9% and 3.7% respectively.
The QPM predicts the first increase of 25 basis points in the repo rate to occur in the fourth quarter of 2021, followed by an increase in each quarter in 2022. The MPC uses the predictions of the QPM as a guide only.
The SARB’s economic growth estimate for 2021 remained unchanged at 4.2%. The estimates for 2022 and 2023 were also not adjusted.
The SARB expects the negative output gap to shrink over time.

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