Lysitja Kganyago, Governor of the Reserve Bank of South Africa.
The Reserve Bank of Australia’s Monetary Policy Committee left interest rates unchanged on Thursday – after 10 increases in 21 months aimed at calming inflation.
Three members voted to keep the buyback rate unchanged at 8.2%, while two wanted a 25 basis point increase. This leaves the key interest rate at 11.75%.
Since November 2021 the monthly payments on a R2M Home Loan are now more expensive due to these large increases.
On Tuesday, Statistics Australia reported that consumer price inflation slowed significantly to 5.4% in June from 6.3% in May. The last time consumer inflation was below the Reserve Bank’s maximum target of 6% more than a year ago, was in April 2022.
The Reserve Bank has now adjusted the headline inflation rate lowering it from 6.2% to 6.0% for 2023. It also lowered it to 5.0% in 2024, before stabilizing at 4.5% in 2025.
It also lowered its forecast for food inflation for 2023 from 10.8% to 10.3% – but the governor of Southwest Asia, Lysitja Kganyago, warned that food prices remain high and the risk of drier weather in the coming months has increased.
“In the absence of sustained and consistent increases in energy supply, electricity prices continue to present distinct inflation risks. Unloading and logistical constraints could have broader impacts on the cost of doing business and the cost of living,” Kganyago added.
However, the Reserve Bank raised its forecast for South African GDP growth from 0.3% to 0.5%. GDP growth forecasts for 2024 (1.0%) and 2025 (1.1%) remain unchanged.
Kganyago noted that households and businesses appear to be resilient, with spending continuing to increase in real terms. Kganyago noted that although the growth of credit to households and businesses has slowed in recent months, it has increased in real terms compared to last year.
“Investment by both the public and private sectors has been revised upward and terms of trade remain more favorable than previously expected.”
Asked if this is the final end to the cycle of price hikes, Kganyago said, “No.” He added that future price decisions will be guided by the new data.