{"id":27169,"date":"2012-11-22T17:19:42","date_gmt":"2012-11-22T15:19:42","guid":{"rendered":"http:\/\/businesstech.co.za\/news\/?p=27169"},"modified":"2012-11-22T17:36:36","modified_gmt":"2012-11-22T15:36:36","slug":"repo-rate-unchanged","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/trending\/27169\/repo-rate-unchanged\/","title":{"rendered":"Repo rate unchanged"},"content":{"rendered":"

The prime interest rate will remain steady after the SA Reserve Bank<\/a> opted on Thursday not to change the repo rate.<\/p>\n

Making the announcement in Pretoria, governor Gill Marcus<\/a> cited high food inflation, a weaker rand and low domestic output as some of the considerations made by the Monetary Policy Committee in arriving at the decision.<\/p>\n

“Widespread labour market instability and work stoppages have reduced output and export volumes, with the potential for employment losses,” she said.<\/p>\n

Risks to the inflation outlook had been increased by a further depreciation of the rand exchange rate and the impact of the re-weighting and re-basing of the CPI basket by Statistics SA<\/a>, Marcus said.<\/p>\n

The announcement meant the repo rate would be unchanged at five percent a year.<\/p>\n

This is the rate at which commercial banks can borrow money from the central bank. It is used to calculate the prime rate, which banks give their best customers.<\/p>\n

Inflation was expected to average at 5.6 percent in the final quarter of 2012, and at 5.6 percent for the year, she said.<\/p>\n

It was expected to average at 5.5 per cent in 2013, and five percent in 2014.<\/p>\n

Marcus said the global economic outlook had deteriorated and there was a bleak view on unresolved sovereign debt crisis.<\/p>\n

“For some time, the exchange rate of the rand has been determined primarily by external developments… More recently, domestic factors appear to have become dominant determinants of the exchange rate.”<\/p>\n

These factors included the increased risk posed to the economic outlook by labour market developments in the mining and agricultural sectors in particular.<\/p>\n

Since the previous meeting of the MPC, the rand had depreciated by about 6.7 percent against the US dollar, 5.8 percent against the Euro, and by 5.8 percent on a trade-weighted basis.<\/p>\n

Isaac Matshego<\/a>, economist at Nedbank<\/a>, said the announcement was expected due to the current domestic economy.<\/p>\n

“The outlook for the domestic economy has deteriorated since the September MPC meeting, but the committee was compelled by concerns about inflation to keep interest rates unchanged,” he said.<\/p>\n

He said the weaker rand posed a risk to the inflation outlook, while recent high wage settlements could also add to the inflation spiral.<\/p>\n

On Wednesday, StatsSA announced that Consumer Price Inflation accelerated to 5.6 percent in October, from 5.5 percent in September.<\/p>\n

The increase was driven by hikes in food prices, non-alcoholic beverages and fuel.<\/p>\n

“The conflict between weaker growth and rising inflation will most likely keep monetary policy neutral over an extended period.<\/p>\n

“We believe interest rates will remain unchanged for an extended period, with a reversal in policy easing likely only late in 2013,” said Matshego.<\/p>\n

Related articles<\/h3>\n

Repo rate remains unchanged<\/strong><\/a><\/p>\n

SARB unveils new Mandela bank notes<\/strong><\/a><\/p>\n

SA gets interest rate cut (July 2012)<\/strong><\/a><\/p>\n

Interest rates remain unchanged (May 2012)<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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