South African Reserve Bank keeps repurchase rate unchanged at 5½%

By Susanna Moon

Chicago, Jan. 20 - The Monetary Policy Committee of the South African Reserve Bank said it decided to keep the repurchase rate unchanged at 5½% at its meeting on Thursday.

There have been signs since the committee's last meeting that the recovery in the global economy will be sustained, according to a news release by the bank.

The committee lowered the repurchase rate by 50 basis points to 5½% at its meeting on Nov. 18 after cutting the rate by 50 bps on Sept. 9.

The year-over-year inflation rate fell to 3.5% in December from 3.6% in November.

Average inflation was 4.3% for 2010, compared with 7.1% in 2009.

Year-over-year producer price inflation reached a recent peak of 9.4% in June 2010 and has declined moderately since then. In November, it increased by 6.2%, compared with 6.4% the previous month.

The Consumer Price Index forecast was revised upward to average 4.6% in 2011 and 5.3% in 2012, but the domestic inflation trajectory is still expected to remain within the target range over the forecast period to the end of 2012, the release noted.

The committee said that in South Africa, the output gap remains negative and gross domestic product growth is expected to remain below potential over the next two years.

There are signs, however, that the outlook for output growth appears more positive, the committee added.

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