PRETORIA, Feb 9 – South Africa said it would welcome access to new European Central Bank repo liquidity lines if they become available, Reserve Bank Governor Lesetja Kganyago said, highlighting the country’s close trade and investment ties with Europe.
The European Central Bank said this week it plans to make its euro repo facilities cheaper and easier to access as part of efforts to strengthen the currency’s international role. The facilities allow foreign central banks to borrow euros against euro-denominated collateral and are designed primarily for periods of market stress.
Speaking on the sidelines of the Warwick Economics Summit in Coventry, England, Kganyago said South Africa would benefit from such arrangements, given the scale of trade and capital flows with European partners. He said a repo line would help support cross-border transactions and provide an additional liquidity backstop during periods of financial strain.
On domestic policy, Kganyago said the decision to keep the benchmark interest rate at 6.75% means borrowing costs remain well above their eventual endpoint. Policymakers, he said, want clearer evidence that inflation is easing sustainably before adjusting rates again. The central bank’s latest projections point to two 25 basis point rate cuts later this year, followed by another reduction next year..
Kganyago said the outlook should not be viewed as a commitment, noting that the policy path can change as new data emerge. Inflation has moderated over the past year, helped in part by the rand’s earlier strength. Although the currency has softened recently amid global market volatility, he said its swings are less pronounced than in previous cycles.
On global finance, Kganyago said emerging economies are seeking protection from disruptions in payment systems, not a replacement for the U.S. dollar. He said the dollar remains dominant, adding that South Africa’s reserve composition reflects trade patterns and is unlikely to shift materially without changes in those flows.
