ANC sends, then retracts SARB monetary policy statement

The logo of the South African Reserve Bank
The logo of the South African Reserve Bank

A statement by the ANC, imploring the SA Reserve Bank's Monetary Policy Committee (MPC) to "prioritise the plight of the poor" when it took its latest interest rate decision on Thursday, was later retracted.

The retracted statement said the ANC believes monetary policy is a "critical legislative instrument" for driving growth, creating jobs and reducing capital costs in the economy.

A second statement, which retracted the first one, however, emphasised that the ANC respects the independence of the SARB and that the chair of the Economic Transformation Committee (ETC) is handling all policy matters related to "this issue".

According to the second statement, the first (retracted) statement was "unfortunately issued without the requisite consultations".

In the retracted statement reference was made to the cost of living that has "skyrocketed" due to the increased cost of food, fuel and electricity, healthcare as well as education.

The retracted statement also referred to the sluggish growth of the SA economy and expressed the wish that President Cyril Ramaphosa's "stimulus package" must be rapidly activated.

The MPC decided to keep the repo rate the same at 6.5%. The repo rate is the benchmark interest rate at which the SARB lends money to other banks. Changes in the repo rate affect the prime lending rate, which is the lowest rate at which banks start lending to clients. With the repo rate unchanged, the prime lending rate will stay at 10%.   

SARB continues to see upside risks to the inflation outlook. SARB governor Lesetja Kganyago regards SA’s economic battle as mostly structural, therefore, requiring firm action by government.

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