SARB leaves repo rate unchanged
The South African Reserve Bank's Monetary Policy Committee (MPC) has kept the repo rate unchanged at 6.5%.
Governor Lesetja Kganyago made the announcement in Pretoria on Thursday.
This means the prime lending rate will remain at 10%.
"The MPC noted the rising inflation trajectory, which, while remaining within the target range (of between 3 and 6%) is moving closer to the upper end of the target range.
"Key uncertainties in the global environment remain. The continued strength of the US dollar, which has appreciated against most currencies, any sustained elevation of oil prices, escalating trade tensions and geopolitical developments could continue to pose risks to the inflation outlook.
"The rand will remain sensitive to changes in global monetary policy settings and investor sentiment to emerging markets. The committee assesses the risks to the inflation forecast to be on the upside. A number of key risks and uncertainties highlighted in recent meetings persist. Electricity prices continue to pose a further upside risk."
Kganyago said while the impact of the higher value-added tax rate has been less than expected, the weaker rand and higher oil price assumptions will have a bearing on inflation.
The central bank expects GDP growth of 1.2% in 2018, down from the previous estimate of 1.7%.
"At these growth rates the negative output gap is wider in the near term but is still expected to close in 2020," Kganyago said.