South Africa monetary committee keeps repurchase rate steady at 5½%

By Jennifer Chiou

New York, Sept. 22 - The South African Reserve Bank's Monetary Policy Committee said it has once more left the repurchase rate unchanged at 5½%, where it has stood since May.

The committee said in a news release that it is concerned about the potential impact of the current global turmoil on domestic economic prospects, adding that it stands ready to act appropriately should the need arise.

The Consumer Price Index for all urban areas did not budge from 5.3% in August. Food, housing and utilities, and transport together accounted for 3.7% of that tally.

The news release noted that although food price inflation moderated to 7.3% from 7.5%, further acceleration is expected in the coming months.

The committee stated that administered price inflation excluding petrol declined to 8.8% in August from 9.3% in the prior month.

Since the previous meeting, the downside risks to the global and domestic growth prospects have increased and growth in some of the advanced economies has weakened against the backdrop of financial market turbulence, generated in large part by the unresolved European sovereign debt crisis, the release added.

Recent data have confirmed the fragile and uneven nature of the domestic economic recovery, and unfavorable forward-looking indicators are consistent with a downward revision of the bank's economic growth forecast, the committee said.

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