Publications
Partners
Johannesburg - The South African Reserve Bank left the repo rate unchanged at 5.5% on Thursday as expected, partly citing inflation concerns.
The majority of 26 economists polled by Reuters saw the rate holding steady, with just two expecting a 50 basis-point cut to 5.0% which would have been a new all-time low for the repo rate.
The bank slashed rates by a cumulative 650 basis points in the two years to November 2010, but has kept them on hold at all six policy meetings it held this year.
Marcus again warned of the risks posed by rising inflation, slowing domestic and global growth and of the fallout from the eurozone debt crisis at the end of the monetary policy committee (MPC) meeting.
"The committee assesses the risks to the inflation outlook to be on the upside mainly due to cost push pressures.
"The exchange rate is also seen to pose some upside risk to the outlook, while downside risks are seen to come from possible contagion effects from the European crisis and associated slow growth," she said.
Marcus said the MPC "is aware of the dangers of a disorderly resolution of the crisis and the systemic implications for the global and domestic economy". It remains ready to act appropriately should the need arise, she added.
Growth revised
She again adjusted the outlook for SA's economic growth.
The slower domestic economic growth in the second quarter of 2011 appears to have continued in the third quarter and the bank's forecast has been subject to downward revision, she said.
Real gross domestic product growth in 2011 is now expected to average 3.0%, compared with 3.2% in the previous forecast. The growth forecasts for 2012 and 2013 have been revised down to 3.2% and 4.2% from 3.6% and 4.4% respectively.
"The downward revision is a result of revised assumptions primarily of international commodity prices and global growth," she said.
Inflation is expected to still breach its 3% to 6% target band by the final quarter of 2011, and to peak at about 6% in the first quarter of 2012 before moderating.
