Johannesburg - The SA Reserve Bank (Sarb) is expected to
keep its main policy rate unchanged for the ninth meeting in a row next week,
hoping the economy will start to show some signs of oomph before it hikes the
rate to curb high inflation next year.
All 31 economists in a Reuters poll this week forecast that
the repo - the rate at which the Sarb lends to commercial banks - will stay at
5.5% when the monetary policy committee (MPC) concludes three days of meetings
on May 24.
"We forecast inflation to be benign enough to allow the
Sarb scope to delay the rate-hiking cycle, in the context of a lingering output
gap and the fragility of the global economy," said Renaissance Capital
economist Elna Moolman.
Even though inflation breached the top end of its 3-6%
target band this year, the Sarb has left interest rates unchanged for 17 months
at an over 30-year low, hoping economic growth will pick up pace after a 2009
recession. Governor Gill Marcus said last week the monetary policy
stance was accommodative because of the persistence of the negative output gap
- the difference between the economy's growth potential and its actual output.
However, with inflation at the upper end of the target
range, there was "limited, if any, room for further monetary accommodation
at this stage", she said.
Headline consumer inflation eased to 6% in March from 6.3%
at the start of the year, after an initial breach of the target in November.
The bank expects gross domestic product growth of 3% for
this year. Preliminary numbers showed 2011 growth at 3.1%.
"Sluggish growth remains the key concern. Eurozone
problems threaten this further while the resulting financial market turmoil may
see a weaker exchange rate and hence more inflation pressure," said Luke
Doig, economist at Credit Guarantee Insurance.
The rand has lost nearly 8% since the MPC's last meeting at
the end of March.
Of the 31 economists surveyed by Reuters, six think there
may be room to raise the benchmark rate by 50 basis points before the year is
over, while two think inflation may ease enough to allow for a cut before
The others see rates on hold for the rest of the year.