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No surprise as rates left unchanged

Johannesburg - The SA Reserve Bank (Sarb) has left its key repo rate at a historic low of 5.5%, in line with expectations.

The consensus among analysts was that the Sarb's monetary policy committee (MPC) could afford to leave rates unchanged as consumer inflation stayed at 6.1% year-on-year (y/y) in December for the second month in a row.

Although inflation is out of the Sarb's 3% to 6% target band, the bank has said it expects this range for most of 2012.

Manufacturing and retail sales data indicated fragility in the economy. The purchasing managers' index for December contracted, indicating a slowdown in factory output.

Retail sales for November grew at a lower-than-expected pace of 6.8% y/y, showing that consumer demand had not recovered fully.

The MPC was expected to discuss raising rates later this year at its first meeting of 2012.

 
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