Publications
Partners
Johannesburg - The decision by the SA Reserve Bank's monetary policy committee to keep the repo rate unchanged was welcomed on Thursday.
FNB chief economist Sizwe Nxedlana said the rate stability brought certainty to the economy, but that domestic economic growth was expected to remain weak.
"This is associated with under-utilised resources and muted core inflation," he said in a statement.
"Also, global inflation is low and there have been meaningful declines in global commodity prices. Against this background, we do not think that the Sarb will raise rates anytime soon."
He said the rates were likely to remain unchanged for 2013 and 2014.
South Africa had a large current account deficit in the global environment.
US monetary policy would begin normalising gradually and would place the rand and other emerging market currencies under pressure, he said.
Standard Bank said the decision was in line with the market expectations.
"Inflation over the coming years is now 'uncomfortably close' to the upper end of the inflation target range. Through much of the commentary, upside risks to inflation were emphasised."
It said conditions were unsuited to an imminent rate hike.
Nedbank said there would be no change to its current prime overdraft rate, the vehicle and asset finance rate, and the mortgage rate applicable to home loans.
Bank governor Gill Marcus said the decision was taken given the global uncertainties and downside growth risks.
The repurchase (repo) rate unchanged at 5% per annum. The repo rate is the one at which commercial banks borrow money from the Sarb, and is used to calculate the prime interest rate banks give their best customers.
Marcus said consumers remained under pressure, with persistently high debt to disposable income ratios further exacerbated by the rising cost of petrol and other administered prices.
The Independent Municipal and Allied Trade Union said a rate cut would have been preferable.
"This year our members have faced steep increases in administered prices; such as petrol, water, public transport and electricity, and increased interest rates would put excessive and unaffordable pressure on workers," general secretary Johan Koen said.
“The consensus view as to when we’re likely to see a rise in interest rates tends to be middle, even end of next year,” said Chris Gilmour, investment analyst with ABSA Asset Management Private Clients.
However, the possibility of a small – 25 basis point – interest rate cut was not ruled out, given the parlous state of the economy, Gilmour told Fin24.
Watch the interview
- Sapa, Fin24
