• Inside Labour

    There are silver linings to dark global clouds, says Terry Bell.

  • Labour Wrap

    Terry Bell looks back over perhaps the most turbulent and taxing year in the past 20.

  • Putin and the rouble rout

    Russia is not the West and Putin may well survive unscathed, says Leopold Scholtz.

See More

Rates on hold at 5%

Jan 24 2013 15:21 Reuters

Reserve Bank Governor Gill Marcus. (AFP)

Related Articles

Economic growth seen subdued in 2013

Fitch downgrades SA's big banks

Why rating agencies downgrade SA

Still hope for an early rate cut

Interest on my bond

SA to enjoy lower rates for longer

Cape Town - The South African Reserve Bank (Sarb) left its benchmark interest rate unchanged at 5.0% on Thursday, citing concerns about rising food prices and a depreciating rand exchange rate in a period of slowing growth.

All 23 economists polled by Reuters last week forecast the Reserve Bank's monetary policy committee would leave rates unchanged at 40-year lows, with 10 economists expecting the next move to be a 50 basis-point hike in 2014.

The bank left rates unchanged at all its policy meetings last year except for July, when it decided on a surprise cut of 50 basis points.

The prime lending rate stays at 8.5%.

Sarb governor Gill Marcus said the bank expects gross domestic product to be about 3.8% in 2014, compared with 3.6% previously.

She said the risk to the inflation outlook remains on the upside, in large part due to continued exchange rate and wage cost pressures.

The bank is expecting inflation to average 5.8% in 2013.

"The inflation forecast of the bank reflects a further deterioration in the inflation outlook for 2013 compared with the previous forecast.

"Having averaged 5.6% in 2012, inflation is now expected to average 5.8% in 2013 and 5.2% in 2014, compared with previous forecasts of 5.5% and 5.0% for the respective years."

On domestic growth, she said economic growth remains fragile and below potential, following an annualised growth rate of 1.2% in the third quarter of 2012 and an estimated growth rate of about 2.5% for the year.
"A similar outcome is expected in 2013 with growth of 2.6% forecast, revised down from 2.9% in the previous forecast."

Marcus said the exchange rate and wage hikes still pose risks.

"The rand exchange rate continues to pose an upside risk to the inflation outlook.

"The exchange rate has been impacted by the widening deficit on the current account on the balance of payments in 2012 and changing global and domestic risk perceptions, particularly relating to the adverse developments in the South African labour market and the downgrades by the various ratings agencies."

gill marcus  |  interest rates  |  inflation  |  sa economy


Lastest Articles

Here is how to check your credit score and manage it Read More...
Top tips to save money over the festive period Read More...
These are the top 5 most fuel efficient cars in SA Read More...
What to consider when switching medical aid schemes

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Add your comment
Comment 0 characters remaining

Company Snapshot

We're talking about:

Small Business

Retailers of any shape and size can now unlock the power of mobile transacting.

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...