JOHANNESBURG, Aug 1– The South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) voted on Thursday to reduce the repurchase rate by 25 basis points to 7 percent in a unanimous decision. SARB Governor Lesetja Kganyago said at a media briefing that with South Africa expecting higher tariffs from the United States, the economic growth is expected to be lower for the current fiscal year. “But there are risks that permanently higher tariffs, or adverse geopolitical developments, could cause more disruption to the global economy than we have seen so far this year,” the governor said. With South Africa’s inflation target range set between 3 and 6 percent, with a midpoint of 4.5 percent, the governor used the briefing to reiterate the central bank’s stance that it prefers inflation to be lowered to 3 percent. “Our existing 3-6 percent target is too high and too wide, and should be reformed. With actual inflation close to 3 percent, we wanted to highlight the opportunity to achieve permanently lower inflation at minimal cost,” Kganyago said. Kganyago said the bank would continue with the National Treasury on inflation reform. “Over the past few months, the prospect of a lower inflation target has bolstered the rand and lowered long-term borrowing costs. It is important to sustain this progress, and to minimize uncertainty about the longer-term objectives of monetary policy.”
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