Repo rate left unchanged
The South African Reserve Bank (Sarb) Governor Lesetja Kganyago has announced that the repo rate will remain unchanged at 6.75%.
This is the third time the bank has made no adjustments to the repo rate.
The prime lending rate stands at 10.25%.
Kganyago says the rand appreciated following the election of Cyril Ramphosa as president of the African National Congress (ANC) in December and after Eskom was granted a lower than expected tariff increase.
"Rand exchange rate responded strongly on the outcome of the ANC elective conference and since then has traded in the range of R12.25 and R12.50 against the US dollar. This is a sharp contrast to the recent low of R14.75 a month earlier."
He says the National Energy Regulator's (NERSA) decision not to allow Eskom's tariff increase of about 19%, will ease inflationary pressures. have a positive effect on inflation.
But Kganyago warns the introduction of the sugar tax will increase food prices.
"The sugar tax is expected to increase food price inflation and redline inflation by 0.6 and 0.1% points respectively. Food price inflation is now expected to average 5.2% and 6% in 2018 and 2019 respectively."