Johannesburg - Private sector credit extension has moderated further, the latest statistics from government show.
According to Investec, the rate of private sector credit extension moderated further in May to 6.6 percent year-on-year from the previous year ago figure of 7.1 percent and from 8.7 percent in the first quarter of this year.
The bank adds, in May, credit extension to the corporate sector slowed to 10.6 percent year-on-year from 11.6 percent in April.
It also notes household credit growth held steady at 2.4 percent year-on-year compared to a previous figure of 2.3 percent.
Read also: Fitch sees UK investments dropping
The bank points out that the South African Reserve Bank notes that weak economic growth, rising interest rates, surging food prices, higher electricity tariffs, high unemployment and stricter credit regulations are some of the factors that have added to the financial strain of the household sector.
Based on the extent of weakness in domestic economic activity, downside risks to global growth and the sharp paring back of global interest rate expectations post the Brexit referendum, it is probable that the reserve bank will not hike rates at its July Monetary Policy Committee meeting.
The interest rate is currently at 10.5 percent after several successive hikes to keep inflation in check, although the bank paused at its last meeting.
IOL