Johannesburg - South African credit growth eased for a third month to 7.4 percent in July, the slowest pace since April 2012.
Growth in borrowing by households and companies fell from 8.9 percent in June, the Pretoria-based Reserve Bank said on its website on Friday. The median estimate in a Bloomberg survey of 13 economists was 8.6 percent.
The Reserve Bank has kept its benchmark lending rate at 5 percent for more than a year as a weaker rand and rising fuel costs boost inflation, limiting the room for policy makers to cut interest rates to spur economic growth. While consumer spending in the first quarter grew at the slowest pace since the 2009 recession, confidence, as measured by First National Bank and the Bureau for Economic Research, improved from a nine-year low in the second quarter.
“The weaker credit growth strengthens the argument to stimulate the economy, but the number-one factor the Reserve Bank will have to look at is still inflation,” Christie Viljoen, an economist at NKC Independent Economists in Paarl, said by phone. “This will not change anything for monetary policy in the short term.”
Inflation at 6.3 percent in July exceeded the Reserve Bank’s 3 percent to 6 percent target range for the first time in 15 months. The rand gained 0.2 percent to 10.3426 per dollar at 8.46 a.m. in Johannesburg, trimming the decline this year to 18 percent.
The broad M3 measure of money supply rose 7.4 percent in July from a year earlier compared with 9.2 percent percent in June, the Reserve Bank said. The median estimate in a Bloomberg survey of 9 economists was 8.5 percent. - Bloomberg