Reserve Bank: SA growing again

Pretoria - South Africa's current monetary policy stance is "adequate" to cool inflation while also allowing for the economy to return to growth, the central bank said on Wednesday.

The Reserve Bank said in its twice-yearly Monetary Policy Review the country's recovery from recession would be hesitant but that there were convincing signs the low point in the cycle had been reached, with positive growth seen in the final quarter of this year.

The bank's policy committee left the repo rate unchanged at 7 percent on Tuesday, citing balanced price risks, after cutting the base lending rate by 5 percentage points between December last year and August this year to help spur the economy.

"Even though some risks to the inflation outlook remain, the current monetary policy stance is deemed adequate to moderate inflation further to within the target range, while simultaneously allowing for the resumption of a positive growth trajectory," the central bank said in the review.

Its forecast put average quarterly consumer inflation in the 3 to 6 percent band in the second quarter of next year, assuming interest rates are steady and providing for a 25 percent a year increase in power prices.

The bank said the fact that CPI was seen inside, but close the top end of the band for an extended period, was a concern as it left the forecast at risk from small price shocks.

Electricity utility Eskom will submit a revised request to the national energy regulator after strong criticism of its initial plan to raise tariffs by 45 percent over the next three years.

- Reuters