South Africa Reserve Bank says repurchase rate unchanged at 5½%

By Jennifer Chiou

New York, Jan. 19 - The South African Reserve Bank's Monetary Policy Committee said it is holding the repurchase rate steady at 5½%, where it has been since May 2010.

The committee said that since its previous meeting in November, the outlook for domestic inflation and economic growth has deteriorated, posing a serious challenge for monetary policy going forward.

According to a bank news release, inflation is now expected to remain above the upper end of the target range for a more extended period, but there is still no evidence of significant demand pressures in the economy.

While economic growth in the fourth quarter was likely to have exceeded that in the previous two quarters, the forecast for growth in 2012 has been revised downward, the release noted, stating that the primary reason for the worsening domestic growth outlook is the risk of contagion from the persistent crisis in Europe, which shows no sign of a speedy resolution.

Producer price inflation moderated to a year-over-year rate of 10.1% in November from 10.6% in October, the committee added.

The impact of the depreciated rand exchange rate is evident in the 15.9% increase in the price of imported commodities, the release said. Food price inflation remained elevated, with agricultural prices increasing at a rate of 12.1% in November.

The committee prefers a stable interest rate environment given the conflicting pressures on monetary policy at this stage.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.