South Africa’s record low lending rates, which the central bank kept unchanged on Thursday despite rate hikes in other emerging markets, will not last forever, Governor Lesetja Kganyago said on Friday during an online address. The Reserve Bank (SARB) left its repo rate at 3.5% for a fourth meeting in a row in a unanimous decision. While the decision was in line with most economists’ expectations, a slew of rate hikes in countries such as Brazil, Russia and Turkey in response to climbing U.S. Treasury yields had raised speculation the SARB might follow suit. At the meeting on Thursday, Kganyago said the bank saw overall risks to the inflation outlook as balanced, and that the impact of currency volatility, partly caused by the jump in U.S Treasuries, was low. On Friday, in a Q&A session with the UK-based South African Chamber of Commerce, Kganyago reiterated this view, but warned the bank could not keep lending rates low indefinitely. “The monetary policy stance in South Africa is hugely accommodative. The interest rate is below the neutral rate. On a forward looking basis, interests rates are negative in real terms,” Kganyago said. “(But) it can’t continue forever. At some stage the savings pool will say: No, this is favouring borrowers over us, the savers, and they will re-price you.” The central bank’s quarterly projection model predicts at least two rate hikes in 2021, but Kganyago played down the chances of hikes this year. “Fortunately the monetary policy committee does not outsource its responsibility to the model. We make our own judgements,” he said. “Yesterday we spelt out the risks that could trigger a rise in interests rates: oil prices, electricity prices, and food inflation.” “But those shocks for us when they happen, we see through them. It’s whether they feed into other prices going forward. And when they do, that’s what we call second-round effects and that triggers a policy response,” Kganyago said.