SARB Keeps Main Repo Rate Steady; Forecasts Economy to Grow by 3.6%

By Aaisha Dadi Patel

JOHANNESBURG--The South African Reserve Bank on Thursday kept its main repo rate at 3.5%, and forecast that the economy will grow 3.6% in 2021--slightly more optimistic that the 3.5% it forecast in November.

In the announcement following the bank's first monetary policy committee meeting of 2021, the bank, which in November forecast an 8% contraction for 2020, said it now believes gross domestic product shrank by 7.1% last year. The growth forecast for 2022 remained at 2.4%.

"Monetary policy has eased financial conditions and improved the resilience of households and firms to the economic implications of Covid-19, and continues to be accommodative," Governor Lesetja Kganyago said.

The SARB has cut its repo rate by a total of 3 percentage points since January 2020. Africa's most developed economy is currently battling an aggressive second surge of coronavirus infections, recording a total of 1,369,426 cases and 38,854 deaths.

Mr. Kganyago said that two of the five-member Monetary Policy Committee had voted in favor of a 0.25% rate cut this week. The current 3.5% is already the lowest repo rate on record.

Write to Aaisha Dadi Patel at [e-mail]

(END) Dow Jones Newswires

01-21-21 0851ET