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Interest rate unchanged - as it happened

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21 May 2015

We'll be wrapping up live updates and it remains to be seen what the MPC will decide on interest rates in July.

21 May 2015

Kganyagos speech: This forecast makes an assumption regarding the persistence of electricity shortages, which are expected to be relieved somewhat only in 2017. However, the risks to growth are assessed to be on the downside.

21 May 2015

Comment: Kay Geldenhuys, manager of property financing processing at ooba: The decision to keep the interest rate the same is a great relief to South African property owners and the relatively low and stable interest rate environment that continues to prevail is good news for the residential housing market as it gives prospective homebuyers an opportunity to acquire property and secure home loan finance at an affordable cost of credit.

The South African property market outlook for 2015 remains positive with steady house price growth, stable and relatively low interest rates and increased lenders’ confidence, evidenced by the current trend of higher home loan approval rates recorded by ooba.

21 May 2015

Says Sizwe Nxedlana, chief economist at FNB: The repo rate was kept on hold today as inflation is well within the Sarb target band (3% - 6%) and economic growth remains under pressure.

However, we anticipate that inflation will begin to rise over the coming months due to a deterioration in the outlook for food and fuel prices.

Given the rising inflation profile, the Sarb is expected to hike the repo rate later this year and to continue on a gradual path of interest rate normalization during 2016. Consumers and businesses are advised to take this into account when planning their finances.

21 May 2015

FNB CEO Jacques Celliers: Even a small rate hike will sting later in the year. Consumers are already absorbing much higher fuel and electricity prices with a strong likelihood of further increases in energy prices.

Salary increases are also likely to be modest due to slower growth. For these reasons I urge consumers to reduce their borrowing and think carefully before taking a new loan.

21 May 2015

FNB CEO Jacques Celliers: Interest rates have remained unchanged since July 2014, but we believe that a rate hike is becoming increasingly likely. Its implementation only being held back by serious concerns about the economy and high unemployment.

21 May 2015

Comment: First National Bank (FNB) will maintain its prime lending rate at 9.25% following the decision earlier today by the MPC to leave rates unchanged until the next MPC meeting in July.

21 May 2015

Kganyago speech: Consumption expenditure by households is expected to remain relatively subdued, as higher personal tax rates take effect and the benefits of lower petrol prices dissipate.

21 May 2015

Comment: Kelli Knutsen, marketing manager of DebtBusters - Recent client statistics released by DebtBusters have indicated that consumers entering into the debt counselling process and earning less than R5 000 per month are already financially crippled, as the average interest rate for unsecured credit agreements is 24%, the highest amount recorded in six years.

The unchanged rate will give the South African consumers with large amounts of debt a second chance to resolve their finances while they still can but will also provide no short-term relief, as the interest on these debts will stay the same.

21 May 2015

Comment: Kelli Knutsen, marketing manager of DebtBusters: Consumer debt levels in South Africa are still too high and we need repo rate reductions, so that the debt levels can be reduced to more manageable amounts.

21 May 2015

Kganyago speech: While high wage settlements could underpin household consumption expenditure, this could be offset in part by inevitable reductions in employment.

According to Andrew Levy Employment publications, the average wage settlement rate in collective bargaining agreements measured 7.9% in the first quarter of 2015.

Trends in remuneration growth remain a concern to the MPC. Average wage and salary growth has been in excess of inflation for some time, imparting some degree of automatic indexation to wage settlements, and therefore maintaining higher levels of inflation.

The FNB/BER consumer confidence index declined sharply in the first quarter of 2015, signalling modest growth in consumption expenditure going forward.

21 May 2015

Kganyago speech: Since the previous meeting of the MPC, Brent crude oil prices have increased by about US$10 per barrel. Domestic petrol prices remained unchanged in May, but a further increase of around 50 cents per litre, should current trends persist, is likely in June, attributable mainly to higher international product prices.

21 May 2015

Kganyago speech: Significant additional electricity tariff increases are likely to cause inflation to diverge significantly from the target range for a more extended period than our baseline forecast suggests.

Although the upward revision of the inflation forecast was relatively small, the persistence of medium term inflation at elevated levels and the deteriorating risks to the outlook are an increasing concern to the MPC.

21 May 2015

Kganyago speech: Any significant weakening of the exchange rate in reaction to US monetary policy tightening could cause inflation to diverge even further from target, and set in motion an exchange rate-inflation spiral.

The main risks to the outlook remain electricity tariff increases, the exchange rate and wage settlements.

21 May 2015

Kganyago speech: The MPC recognises that domestic inflation is not driven by demand factors that are more easily dealt with through monetary policy responses. Household consumption expenditure remains relatively subdued.

The rand remains vulnerable to global market reaction to US policy normalisation, particularly in the context of South Africa’s twin deficits.

21 May 2015

Kganyago speech: Growth remains fragile, constrained by electricity shortages and low business confidence and the risk to the outlook remain on the downside. But this cannot be solved by monetary policy alone. Monetary policy action will need to achieve a fine balance between achieving our primary mandate of price stability and not undermining growth unduly.

21 May 2015

Kganyago speech: Growth remains fragile, constrained by electricity shortages and low business confidence and the risk to the outlook remain on the downside.

But this cannot be solved by monetary policy alone. Monetary policy action will need to achieve a fine balance between achieving our primary mandate of price stability and not undermining growth unduly.

21 May 2015

Four members of the committee favoured an unchanged stance while two favoured a 25 basis point increase.

21 May 2015

Kganyago: From the next MPC meeting in July the Sarb will take further steps to increase transparency by publishing the assumptions underlying the Bank’s forecast with the MPC statement.

21 May 2015

While no surprise in view of the better than expected April inflation rate of 4.5% (against a predicted 4.7%), the decision by the Monetary Policy Committee of the Reserve Banks is nonetheless great news for first time home buyers especially.

That is the word from Samuel Seeff, chairperson of the Seeff property group who says that keeping the interest rate at what remains a five-decade* historic low of 5.75% (base home loan rate of 9.25%) has been an important driver of the growth in the housing market.

21 May 2015

The repo rate remains 5.75%, prime rate stays at 9.25%

21 May 2015

In spite of a current economic environment characterised in part by muted growth, subdued business and consumer confidence – coupled with reduced disposable income and ongoing energy constraints, South Africa’s housing market, across all segments, continues to demonstrate noteworthy stamina and resilience in the face of these challenges, says Dr Andrew Golding, CE of the Pam Golding Property group.

21 May 2015

Repo rate remains unchanged said Governor Lesetja Kganyago

21 May 2015

Kganyago: Any significant weakening of rand to dollar could set in motion an exchange rate inflation spiral. Monetary policy should look through supply side shocks like electricity increases but we need to monitor possible impact on inflation which is uncomfortably close to the upper target.

21 May 2015

Kganyago: Vulnerability to inflation changes. Wage settlements, exchange rate, electricity increases all risks.

21 May 2015

Kganyago: International oil price appears to have stabilised. Further fuel price increase likely in June.

21 May 2015

Kganyago: Still no wage settlements in coal and gold sectors. Food price inflation is expected to contribute to upside inflation pressures. Maize prices have risen to close to import parity levels.

21 May 2015

Kganyago: Expectation of higher interest rates may have impacted on demand for credit. Unit labour cost showed an increase. Public sector wage settlement's full impact is still unclear.

21 May 2015

Kganyago: Continued weak growth across all the main categories of credit. Impending changes in Basel regulatory framework is also contributing to relatively tight credit growth.

21 May 2015

Kganyago: Household expenditure is expected to remain subdued. Growth in expenditure on non-durable goods is expected to decline.

21 May 2015

Kganyago: Continuation of sluggish growth output suggested. First quarter mining output is expected to be subdued. Platinum Group Metals were strong in March, by contrast manufacturing output appears to have contracted.

21 May 2015

Kganyago: Domestic growth outlook remains weak with continued electricity constraints.

21 May 2015

Kganyago: Some further pressure is likely on the exchange rate. Rand remains an upside risk to the inflation outlook, though tempered somewhat by latest CPI.

21 May 2015

Kganyago: Rand traded between R11.80 and R12.20 to dollar since last MPC meeting. The rand continues to be vulnerable to the ebbs and flows of international factors

21 May 2015

Kganyago: Most central banks remain in the same boat. In Brazil monetary policy was tightened for the 3rd time this year. Financial markets still expect first interest rate move by the Fed in September.

21 May 2015

Kganyago: Chinese economy is still slowing.

21 May 2015

Kganyago: The Eurozone has surprised and is on the upside. Japan is expected to grow by just below 1% in 2015.

21 May 2015

Kganyago: Salary increases could indirectly impact...

21 May 2015

Kganyago: Currency depreciation also impacted. Electricity price increases also impacted. Eskom has applied for further price increases.
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