The repo rate determines the interest rate at which the Central Bank lends money to commercial banks, which then affects the rate at which they lend money to consumers.
On Monday, the bank announced that the rate of inflation, as measured by the year on year percentage change in consumer price index (CPI), was 6.7 percent in April, compared to 6.5 percent in March the same year.
The upsurge emanated from both food and non-food components of the CPI basket.
“The domestic economic recovery remains largely conditional on developments related to potentially stronger and prolonged rise in virus infections, COVID-19 containment measures and the rollout of vaccines,” the CBL governor, Dr Retšelisitsoe Matlanyane said on Monday when presenting the statement of the Monetary Policy Committee (MPC).
MPC is committed to conducting monetary policy with the sole purpose of maintenance of macroeconomic stability.
During its meetings, the committee considers international, regional and domestic economic developments as well as financial market conditions.
The governor further revealed that the broad measure of money supply (M2) declined by 1.3 percent in the first quarter of 2021, from an increase of 9.9 percent in the previous quarter.
The decrease, she said, was due to a 4 percent growth in total banking sector net domestic assets, which was moderated by 0.8 percent rise in the sector’s net foreign assts.
“Private sector credit extended and banks fell by 0.1 percent in quarter one, after contracting by 0.5 percent in the fourth quarter of 2020. Loans and advances extended to business enterprises increased by 1.1 percent in quarter one, compared to a 3.1 percent decline realised in the fourth quarter of 2020,” Dr Matlanyane said.
Conversely, total credit granted to households fell by 0.5 percent in quarter one, relative to an increase of 0.5 percent in the quarter ending December 2020.
The current account recorded a surplus equivalent to 1.1 percent of GDP in the first quarter of 2021, from a deficit of 1.8 percent of GDP in the preceding quarter.