South Africa keeps rate at 5½% as inflation ticks up, growth view dims

By Susanna Moon

Chicago, May 22 - South African Reserve Bank's Monetary Policy Committee decided to keep the repurchase rate at 5½% at its meeting on Thursday. The bank last increased the rate by 50 basis points on Jan. 30.

Since the bank's last recent policy meeting, "inflation has breached the upper end of the target band and is expected to remain outside the target for some time," according to a bank notice, in line with its forecast.

The year-on-year inflation rate as measured by the consumer price index for all urban areas was 6% and 6.1% in March and April 2014 respectively, up from 5.9% in February.

The bank's forecast of headline inflation is now expected to average 6.2% in 2014, compared with 6.3% at the last meeting.

Core inflation is expected to average 5.6% in 2014 and 5.7% in 2015.

On the economic front, the domestic growth outlook has worsened and the toll is growing from the protracted strike in the platinum sector, the bank said.

The mining and manufacturing sectors seem to have shrunk in the first quarter, with electricity supply constraints dimming the outlook.

"Against this backdrop, monetary policy faces an increasingly challenging scenario," the notice said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.