Sovereign risk puts pressure on repo rate, Reserve Bank warns
SA has serious growth challenges but lower inflation and the improved credibility of policy has helped limit the risk of stagflation
SA’s high risk premium is the major driver of a higher repo rate, Reserve Bank head of economic research Chris Loewald told MPs on Tuesday.
Loewald is also a member of the Bank’s monetary policy committee (MPC), which decides the repurchase rate. In January, the MPC decided to reduce the repo rate by 25 basis points to 6.25% and it foresees a second cut late in 2020.