Interest rates to rise in the next two years, says Reserve Bank
The central bank estimates that SA’s repo rate will increase from 6.5% to 7.7% by the end of 2020 to contain rising inflation
The Reserve Bank expects interest rates to rise in the next two years to help contain accelerating inflation, it said in its latest monetary policy review (MPR). Its quarterly projection model shows the repo rate increasing from 6.5% to 7.7% by the end of 2020. "Although inflation has been quite well behaved for much of the year, it has now begun to accelerate, and we should expect it to be over 5% through 2019 and 2020," said Bank governor Lesetja Kganyago in the foreword of the monetary policy review, released on Monday. The Bank’s inflation target is between 3% and 6%. The Bank has made it clear that the monetary policy committee is "uncomfortable" with inflation expectations closer to the upper end of the target range and would prefer inflation anchored at the midpoint of 4.5%. Inflation was at 4.9% in September. The committee is expected to hold rates steady when it announces its next decision on November 22. Rising oil prices and a weaker rand have weighed on SA’s economy, whi...