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Johannesburg - The South African Reserve Bank's (Sarb's) monetary policy committee (MPC) has left the key repo rate unchanged on Tuesday at 7%, leaving the prime lending rate steady at 10.5%
The repo rate is the rate at which the central bank lends to other banks, while the prime lending rate is the benchmark rate at which banks lend to customers.
The MPC decided to leave rates unchanged, even though economic data indicated the economy had weakened in the last quarter.
"The economy remains exceptionally weak; data show a bleak picture," said Nedbank senior economist Dennis Dykes prior to the MPC announcement. "But we have to concede that inflation is not going to come down much below the target range."
Employment figures released in October showed more than a million jobs had been lost in 2009. Cost inflation, including food and oil, was evident but this was not directly linked to consumer demand, Dykes said.
Commenting on new Reserve Bank governor Gill Marcus, Dykes said he expected she would keep a consistent view on interest rate changes and not be swayed by popular demand.
However, he said if there was no cut on Tuesday, there would be one later in the cycle.
- Fin24.com