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SARB: Rate hike expectations exaggerated

Economy

Johannesburg - Expectations by South Africa's short term interest rate markets of up to 200 basis points in rates hikes this year are over-exagerated, Reserve Bank Governor Gill Marcus said on Monday.

Marcus also told Reuters in an interview that achieving real positive interest rates was not something the Reserve Bank would like to do, given weak domestic growth of below 3 percent, and that future rate decisions would be data-dependent.

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Cape Town. 100219. South Africa is coming out of its first recession in almost two decades reasonably rapidly, says Reserve Bank Governor Gill Marcus. Marcus also said monetary policy remains directed towards containing inflation. The central bank has cut rates by 500 basis points since December 2008, and left the repo rate flat at 7,0% at its last four meetings. Picture Mxolisi Madela

The Reserve Bank increased its repo rate by 50 basis points to 5.5 percent last week, the first hike in about 6 years, to head off inflation pressures stemming from a weaker rand.

Marcus said the Reserve Bank had not taken the decision to increase rates lightly, and had taken into consideration the implications for growth and employment. - Reuters

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