BREAKING NEWS: SA Reserve Bank Keeps Repo Rate Unchanged - Prime Rate Remains 11.75%

The SA Reserve Bank's monetary policy committee left interest rates unchanged on Thursday - after 10 hikes in 21 months aimed at cooling inflation.

On Tuesday, Statistics SA reported that consumer price inflation had slowed dramatically to 5.4% in June from 6.3% in May. The last time consumer inflation was below the Reserve Bank's maximum target of 6% was more than a year ago, in April 2022. 

The Reserve Bank has now revised its headline inflation rate down from 6.2% to 6.0% for 2023. It also lowered it to 5.0% in 2024, before stabilising at 4.5% in 2025.

It also lowered its food price inflation forecast for 2023 from 10.8% to 10.3% - but SARB governor Lesetja Kganyago warned that food prices remain high and the risk of drier weather conditions in the coming months has increased.

"In the absence of sustained and consistent increases in energy supply, electricity prices continue to present clear inflation risks. Load shedding and logistics constraints may also have broader effects on the cost of doing business and the cost of living," Kganyago added.

Still, the Reserve Bank bumped its forecast for South Africa's GDP growth from 0.3% to 0.5%. GDP growth forecasts for 2024 (1.0%) and 2025 (1.1%) remain unchanged.

Kganyago noted that households and firms look resilient, with spending still growing in real terms. Although credit growth to households and corporates has slowed in recent months, it has increased in real terms compared to last year, Kganyago noted.

"Investment by the private and public sectors is revised up and the terms of trade have remained more beneficial than previously forecast."