( 3 minutes read)
· The SA Reserve Bank has adopted a “wait and see” with regard to repo rate, which is ruling very low after aggressive monetary-policy easing in the first half of the year
· The central bank last month held the repo rate at 3.5%
· Earlier, the apex bank reduced 300 basis points to provide a cushion against its fight against Covid-19
The SA Reserve Bank has adopted a “wait and see” with regard to repo rate, which is ruling very low after aggressive monetary-policy easing in the first half of the year. The central bank last month held the repo rate at 3.5%. Earlier, the apex bank reduced 300 basis points to provide a cushion against its fight against Covid-19.
The normalization of the repo rate is likely to be gradual, with rates staying at low levels for an extended period. The bank’s forecasting model suggests an upward movement will take place toward the end of 2021, when the repo rate is likely to go up to 4.03%.
The central bank has been criticized by politicians and labor-union officials. They maintain that it should be doing more to create jobs and support an economy that is contracting by 8.2% this year. Monetary policy alone will not hold the key to re-bounding the growth. Output will only recover to pre-virus levels by mid 2023, according to the apex bank and that too only when crucial problems like electricity shortages, record-high government debt and weak business confidence etc are addressed.
