Monetary Policy Committee (MPC) decision

12 May.

Economic Update.

Monetary Policy Committee (MPC) decision

• The MPC has left the repo rate unchanged at 5,5 %, in line with market expectations.
• The SARB has revised its inflation forecasts upwards, with inflation forecast to rise above6 % in the final quarter of 2011.
• Risks to the inflation outlook emanate mainly from international cost-push factors, while the outlook for global inflation has deteriorated somewhat on the back of higher food and oil prices.
• The SARB has revised its growth forecasts slightly downwards, with gdp growth now forecast at 3,6 % (previously 3,7 %) for 2011.
• The rand has been firm but volatile since the last MPC meeting in March 2011, with its recent strength partly reflecting the weak US dollar.
• Although inflation is now expected to rise above the 6 % target band in the final quarter of 2011, the increase is forecast to be temporary, largely driven by international cost-push pressures. As a result, the MPC is likely to continue with its wait-and-see policy until there is evidence of “more generalised inflation”, either due to second-round effects from higher commodity prices or price pressures emanating from robust domestic demand.
• Despite these mounting inflationary pressures, we still expect the Reserve Bank’s MPC to delay its first hike until early 2012 as an early interest rate increase would risk curbing economic growth.

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Download the Statement of the Monetary Policy Committee

MPC meetings during 2011 are scheduled for: 18-20 January; 22-24 March; 10-12 May 2011; 19-21 July; 20-22 September; and 8-10 November.

Monetary Policy Committee

In monetary policy decision-making processes, committees are preferred above individuals. Not one central bank has replaced a committee with a single decision-maker, a fact that has both theoretical and empirical support; the ability to draw diverse viewpoints from constituent members in committees ensures that there is likely to be some moderation of extreme positions and policies and more even policymaking.

South Africa is part of this trend and the decision on the appropriate monetary policy stance is taken by the Monetary Policy Committee (MPC).

The MPC was constituted shortly before South Africa adopted the inflation-targeting framework. The MPC meetings are chaired by the Governor of the Bank.

The current MPC members are: Ms Gill Marcus, Governor; Dr XP Guma, Senior Deputy Governor; Mr A.D. Mminele, Deputy Governor; Mr S.B. Kahn, Advisor to the Governor; Dr M. Mnyande, Chief Economist and Advisor to the Governor​; Mr Bertus van Zyl, Special Projects; and Dr R Cassim, Head: Research Department.