Reserve Bank leaves rates unchanged

The South African reserve bank has kept its repo rate unchanged at 5.5%.

“The MPC has therefore decided to keep the repurchase rate unchanged at 5, 5 percent per annum. At this stage there are no signs of incipient excess demand in the economy, and unless there are significant unexpected changes in the global or domestic outlook the monetary policy stance is expected to remain relatively stable for some time,” Reserve Bank Governor Gill Marcus said on Thursday.

This decision follows the MPC‘s first interest rate two-day meeting of 2011.

The Governor said the MPC had taken note of the improving growth outlook for the economy, adding that it is of the view that the domestic consumption recovery will be sustained.

“While there are increasing risks to the inflation outlook, these emanate primarily from external cost-push factors, and inflation is expected to remain within the target range until the end of the forecast period,” she said.

Last November, the Reserve Bank slashed the repo rate by 50 basis points reducing it to its lowest in 30 years. Since December 2008, the repo rate has been cut by 650 basis points.

The MPC’s decision to keep rates unchanged come as no surprise to analysts. Prior to Thursday’s decision, analysts at Absa Capital said global food prices were likely to feature more strongly in the deliberations of the MPC. – BuaNews