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Cape Town - Reserve Bank governor Gill Marcus on Thursday announced no change in the repo rate.
The decision follows a 3-day meeting of the South African Reserve Bank's (Sarb's) monetary policy committee (MPC).
But consumers are in no way out of the woods. Marcus said the decision to keep the key lending rates on hold at 5.5% was split.
"Five Monetary Policy Committee (MPC) members wanted to hold and two wanted a raise," she said.
The repo rate is the interest rate at which the Sarb lends money to commercial banks. The prime lending rate thus stays at 9%.
In January the Sarb surprised with a 50 basis-point hike.
Statistics SA announced on Wednesday that headline consumer inflation quickened to 6.1% year-on-year in April from 6.0% in March.
This signals that price pressures are rising, which leaves the door open for interest rate hikes later this year.
15:30 - Marcus is surprised that there are not more questions from the media present and thanks everyone for attending before closing the press conference.
15:26 - Marcus concludes and opens the floor up for questions.
15:25 - Marcus: A rate hike takes time to work through the system.
There are a lot of real issues in the South African economy that have to be addressed.
Rise in interest rates is forward looking 12 to 18 months.15:23 - Marcus: Our expectation is that the quarterly numbers will be among the worst since the recession.
In essence SA government is already committed to implementing the NPA. We believe a combination of micro and macro measures needed.
15:22 - Marcus: Objective is to anchor expectations at the upper end of the band. We will take a number of factors into account. We are in a cycle of raising.
15:22 - Marcus: On Sunday we should know who the new finance minister is.
15:21 - Marcus: MPC still holds that we are in a rising interest rate cycle. Repo rate unchanged at 5.5% per annum at this stage.
It was not a unanimous decision – 5 MPC members wanted to hold and 2 wanted to raise.15:21 - Marcus: Lowest quarterly growth rate since 2009 expected. The demand side of the economy continues to weaken.
15:20 - Marcus: Food prices are expected to add further upside risk to inflation.
15:20 - Marcus: Exchange rate remains significant risk to forecast.
15:19 - If current fuel price trends continue, a further decrease in price could be expected in June.
15:19 - Marcus: Domestic price of petrol has benefited from lower international prices.
15:18 - Rate stays on hold - Marcus. More at: http://bit.ly/1sYic8M
15:18 - Food prices remain a factor.
15:17
Trend in wage settlements unchanged - but main wage negotiations yet to be concluded esp, in engineering sector #MPCSpecial on @cnbcafrica
— CNBC Africa (@cnbcafrica) May 22, 2014
15:16 - Trend in wage settlement is relatively unchained, however, main wage negotiations are still to be completed.
15:16 - New vehicle sales declined by over 10% on a year-on-year basis.
15:16 - Consumption expenditure by households is expected to remain constrained.
15:15 - There appears to be continued under utilisation of South Africa’s manufacturing sector.
15:14
S.Africa's growth forecast still remains at 3.1%, but aspects such as a possible electricity price hike could affect the forecast. #MPC
— CNBC Africa (@cnbcafrica) May 22, 2014
15:13 - The risks to forecasts are increasingly to the downside because of increased risks of load shedding.
15:12 -
#SARB governor #GillMarcus: #PlatinumStrike to have significant negative effect on the rand and exports as well as the current account.
— Business Report (@busrep) May 22, 2014
15:11 - The ongoing platinum strike is expected to start having an impact on the economy.
15:11 -
#Marcus - Rand expected to remain vulnerable.
— BusinessDay TV (@BusinessDayTV) May 22, 2014
15:10 - The MPC is mindful of the sensitivity of the rand to local and international factors.
15:09 - Policy rates look set to increase at moderate pace in UK and US in 2014.
15:09 - Low growth expected in a number of the large economies. Growth in sub-Sahara Africa is vulnerable.
15:08 -
Emerging markets have been facing a challenging outlook. Russia, Turkey and China, among others, expect lower growth figures as well. #MPC
— CNBC Africa (@cnbcafrica) May 22, 2014
15:07 - Chinese economy grew at 5.8% in first quarter.
15:06 - UK economic recovery appears to be resilient.
15:04 - Marcus starts speaking
