Repo rate remains unchanged at 7%
The South African Reserve Bank left its benchmark repo rate unchanged at seven percent on Thursday, saying uncertainty surrounding the longer-term market and global growth implications of Brexit clouded the outlook.
The prime lending rate, the figure charged by banks to customers, is to also remain unchanged at 10.5 percent.
South African consumers will heave a sigh of relief after the Reserve Bank governor, Lesetja Kganyago, announced that the Monetary Policy Committee (MPC) had unanimously decided to keep the repurchase rate unchanged at 7 percent, just as it did in May.
But Kganyago said the MPC remained concerned about the domestic economic growth outlook that remained extremely challenging, following the contraction in GDP in the first quarter of this year.
He said the Reserve Bank expected food price inflation to peak at 12.6 percent during the final quarter of this year.
Inflation is now expected to average 6.6 percent in 2016 and 6 percent in 2017.
"There are no clear signs of a recovery in the agricultural sector, and food price inflation is expected to remain elevated for some time," Kganyago said.
This comes after data from Statistics South Africa on Wednesday showed that headline consumer inflation had quickened to 6.3 percent year-on-year in June from 6.1 percent in May.
The Reserve Bank has raised the repo rate – the rate at which it lends money to banks – by a cumulative 75 basis points this year, with the latest 25 basis point increase to 7 percent coming in March. - ANA