Reserve Bank leaves rates unchanged as economic outlook deteriorates
Consumer inflation has moderated but will remain ‘uncomfortably close’ to the upper limit of the target band, Reserve Bank governor Lesetja Kganyago says
The Reserve Bank left interest rates unchanged on Thursday, as had widely been expected. In announcing that the repo rate would remain unchanged at 7%, Bank governor Lesetja Kganyago said although inflation had moderated, the outlook for economic growth had deteriorated. Consumer inflation has been slowing steadily this year, after spending the better part of last year outside the Bank’s 3%-6% target band. Moderating food inflation has been an important factor, as most of the regions hit by a severe drought have experienced relief. In addition, the rand has been relatively strong — and weathered the downgrades to SA’s sovereign credit rating surprisingly well — with recent strength due in part to a weaker dollar. Slowing inflation and the stronger rand, coupled with weak economic growth, may have provided the MPC with reason to cut rates, but the currency remains vulnerable to internal and external shocks — as seen in its fall last Thursday, when news of a Brazilian bribery scandal ...
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