Repo rate remains unchanged at 6.5%
The bank’s monetary policy committee made the decision against a backdrop of looser monetary policy globally
The SA Reserve Bank erred on the side of caution, keeping interest rates steady on Thursday, in line with market expectations.
Only four of 18 economists surveyed by Bloomberg were expecting a rate cut.
The bank’s monetary policy committee made the decision against a backdrop of looser monetary policy globally, with the US Federal Reserve announcing a 25-basis-point cut on Wednesday evening.
The Fed’s decision was not unanimous, however, and economists have noted that it appears fairly divided on the appropriate path for future interest rates.
“Central banks in advanced economies have provided more monetary accommodation, helping ease global financial conditions,” Reserve Bank governor Lesetja Kganyago said on Thursday. “Downside risks from escalating trade and geo-political tensions remain pronounced.”
The bank revised its inflation forecast for 2019 down slightly to 4.2%, from 4.4%.
The projections for 2020 remain unchanged at 5.1%, with a small revision up for 2021 to 4.7% (up from 4.6%).
The bank retained its growth forecasts at 0.6% for 2019 — but revised down its forecasts for 2020 to 1.5%, from 1.8%, and 1.8% for 2021, down from 2%.
The rand has benefited from improvement in global sentiment, Kganyago said, but investors remain concerned about domestic growth prospects and fiscal risks.