Reserve Bank holds rates steady as inflation backs off
The Reserve Bank kept its benchmark repo rate unchanged at 7% yesterday, a weak economic growth outlook offsetting its worries about inflation.
The Bank's monetary policy committee revised its growth forecast to 0.4% for this year, having said in July that the economy would not grow at all.
Inflation is expected to average 6.4% this year, slightly down from an earlier forecast of 6.6%. The Bank's target range is 3% to 6%.
"Given improvements in the inflation forecast, the weak domestic economic outlook and an assessment of the balance of risks, the committee has unanimously decided to keep the repurchase rate unchanged," governor Lesetja Kganyago told a news conference.
"The committee is of the view that if current forecasts transpire we may be close to the end of the tightening cycle," he said.
Kganyago said the committee was worried about inflation, which was at the upper end of the Bank's target range.
In a Reuters poll a week ago, 24 of 28 economists expected the central bank to hold the benchmark rate; the others pencilled in a 25 basis-point increase.