South African repo rate unchanged
The South African Reserve Bank has left the repo rate unchanged at 7.0%, it announced on Tuesday.
Speaking at the announcement, Reserve Bank governor Lesetja Kganyago pointed to a more negative outlook for the country, with lower growth prospects and higher inflation, while pointing out the tough spot consumers found themselves in with growing indebtedness.
“Consumers remain under pressure and consumer confidence remains low,” Kganyago said.
“Households remain under pressure due to relatively high debt, subdued housing and equity markets. Slower wage growth, stagnant employment growth and expected tax increases also likely to dampen consumption expenditure,” the SARB said.
Notable data released by the bank pointed to a lower growth forecast for the year at 1.1%, with the inflation forecast also worsening – only expected to be within the target band of no higher than 6% in the fourth quarter.
This deterioration in the forecast is as a result of potential threat from higher oil prices, Kganyago said.
Food prices are expected to decline thanks to better rainfall than expected, however the overall inflation outlooks remains negative.
However, despite the bleaker prospects for the country, the Reserve Bank made the unanimous decision to keep the rates stable, in line with analyst expectations.
This was the fifth consecutive meeting that the central bank has kept rates on hold.
Read: South Africa’s economy in 2017 – here is what to expect
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