South African Reserve Bank Governor, Lesetja Kganyago, says the current low inflation is expected to bring about a cut in the petrol price in the near future.
He says all three major credit rating agencies’ junk rating and their negative outlook on growth have elevated the country’s risk profile.
Kganyago’s comments follow the bank’s Monetary Policy Committee’s decision to cut interest rates by one percentage point less than a month since its previous announcement.
The move brings down the repo rate to its lowest recorded level at 4.25% with effect from Thursday.
Kganyago says while inflation is expected to remain low this year, the extended lockdown has created a downside risk to future inflation and economic recovery.
“Barring severe and persistent currency and oil shocks, inflation is expected to be well contained remaining below the target in 2020 and close go the midpoint in 2021. Against this backdrop the MPC decided to cut rates by a 100 basis points. This takes the repo rate to 5,2% per annum with effect from 15 April 2020. The decision of the MPC was unanimous,” says Kganyago.