Reserve Bank leaves repo rate unchanged
The South African Reserve Bank (Sarb) on Tuesday left its benchmark repo rate unchanged at seven percent, a fifth time in a row as food price inflation is expected to decline following good rainfalls in parts of the country.
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, September, and November last year.
The prime lending rate, the figure charged by banks to customers, will also remain unchanged at 10.5 percent.
Kganyago said households remained under pressure due to relatively high debt, subdued housing and equity markets.
However, Kganyago said some improvement in agricultural production could be expected and that meat prices were likely to remain relatively high as farmers restock their herds.
A further increase of the petrol price could be expected in February following a 50 cents per litre increase in January.
Sarb revised down marginally the growth forecast for 2017 to 1.1 percent, down from 1.2 percent.
Kganyago said growth prospects remain dependent on uncertain but tentatively improving global conditions and their impact on commodity prices.
“The domestic growth outlook has remained largely unchanged despite a possible weaker outcome in the fourth quarter of 2016,” Kganyago said.
“While some improvement is anticipated over the forecast period, growth is expected to remain below potential. The risks to the growth forecast are assessed to be broadly balanced.”