Johannesburg – The South African Reserve Bank (Sarb) on Thursday, left its benchmark repo rate unchanged at seven percent on Thursday, a third time in a row though it said that the inflation trajectory remained a worrying factor.
Reserve Bank governor, Lesetja Kganyago, announced that the Monetary Policy Committee (MPC) had unanimously decided to keep the repurchase rate unchanged at seven percent, just as it did in May, July, and September.
Kganyago said though the inflation forecast had remained largely unchanged and the risks moderately to the upside of three to six percent target range, consumers were expected to remain under pressure for sometime as food inflation was sensitive to the
continuing drought.
He said the decline in food price inflation was expected to be lower than earlier focused due to delayed impact of meat prices.
“The MPC remains concerned that the inflation trajectory is uncomfortably close to the upper end of the target range,” Kganyago said.
“Furthermore, the uncertain environment and moderately higher risks to the inflation outlook require continued vigilance. While the Committee retains the view that we may be close to the end of the hiking cycle, there may be a reassessment of this position should the upside risks transpire.”
The prime lending rate, the figure charged by banks to customers, is to also remain unchanged at 10.5 percent.
Addressing the emerging market currencies and bond markets challenges, Kganyago said the short-term fallout of Brexit on the UK economy had been limited due in part to the accommodative monetary policy response.
But he said the longer-term impact remained unclear as the terms of withdrawal were still to be negotiated.
Kganyago said the rand was expected to remain sensitive to changes in the stance of US monetary policy and to the sovereign ratings announcements due later this month and early in December.
The bank’s forecast economic growth forecast also remained unchanged at 0.4 percent for 2016, and 1.2 percent and 1.6 percent for the next two years.
African News Agency