Publications
Partners
Johannesburg - South Africa's Reserve Bank left its repo rate steady at 5 percent as expected on Thursday and kept its forecasts for 2013 economic growth and inflation unchanged but warned about the impact of labour strikes.
Leaving rates at 40-year lows, the bank said the growth outlook had not changed and kept its 2013 GDP forecast at 2%, and at 3.3% and 3.6% for 2014 and 2015 respectively.
However the bank did sound concern about the effect of strikes on economic growth and inflation after miners, construction and auto workers downed tools last month.
"While the outlook for the domestic economic growth environment remains unchanged, it has been overshadowed by protracted work stoppages," Governor Gill Marcus said in her fifth monetary policy statement of the year.
Most gold mining firms agreed to wage hikes of up to 8% with employees earlier this month.
"Where wage agreements have been reached, these have generally been above the headline inflation rate, contributing to the upside risk to the inflation outlook," Marcus said.
Inflation broke through the central bank's 3% to 6% target for the second month in August, hitting 6.4% year-on-year compared with 6.3% in July.
The bank also cautioned about the inflationary risks of a weak rand exchange rate.
Although bolstered by the Federal Reserve's surprise decision on Wednesday to maintain its bond-buying programme, the rand is still down 13% against the dollar this year, causing the bank to worry about imported inflation.
Inflation is expected to average 5.9% in 2013, a forecast unchanged from the last MPC meeting in July, while price pressures are seen higher in 2014 and 2015.
CPI is now forecast at 5.8% in 2014 from 5.5% previously and at 5.4% in the year after that from 5.2% previously.
All 25 economists surveyed by Reuters last week had expected the central bank to keep the rates on hold. No move is expected before the second quarter of next year.
- REUTERS
Leaving rates at 40-year lows, the bank said the growth outlook had not changed and kept its 2013 GDP forecast at 2%, and at 3.3% and 3.6% for 2014 and 2015 respectively.
However the bank did sound concern about the effect of strikes on economic growth and inflation after miners, construction and auto workers downed tools last month.
"While the outlook for the domestic economic growth environment remains unchanged, it has been overshadowed by protracted work stoppages," Governor Gill Marcus said in her fifth monetary policy statement of the year.
Most gold mining firms agreed to wage hikes of up to 8% with employees earlier this month.
"Where wage agreements have been reached, these have generally been above the headline inflation rate, contributing to the upside risk to the inflation outlook," Marcus said.
Inflation broke through the central bank's 3% to 6% target for the second month in August, hitting 6.4% year-on-year compared with 6.3% in July.
The bank also cautioned about the inflationary risks of a weak rand exchange rate.
Although bolstered by the Federal Reserve's surprise decision on Wednesday to maintain its bond-buying programme, the rand is still down 13% against the dollar this year, causing the bank to worry about imported inflation.
Inflation is expected to average 5.9% in 2013, a forecast unchanged from the last MPC meeting in July, while price pressures are seen higher in 2014 and 2015.
CPI is now forecast at 5.8% in 2014 from 5.5% previously and at 5.4% in the year after that from 5.2% previously.
All 25 economists surveyed by Reuters last week had expected the central bank to keep the rates on hold. No move is expected before the second quarter of next year.
- REUTERS
