The South African Reserve Bank leaves the repo rate unchanged at 5.0%

30 July 2013 - Which Way To Pay

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SARB leaves rate unchanged

The South African Reserve Bank's (SARB) Monetary Policy Committee (MPC) has decided to leave the repo rate unchanged at 5.0% following a three day deliberation. Reserve Bank governor Gill Marcus delivered the MPC statement in Pretoria last Thursday. The Reserve Bank, has in total, reduced the repo rate by 700 basis points since November 2008. Governor Gill Marcus told a news conference "The MPC continues to face conflicting policy choices relating to rising inflation and slowing growth."

"The MPC is mindful of these conflicting pressures and the challenging domestic and global environment, and will continue to monitor developments closely and act appropriately to achieve its mandate."

Below are some comments about her latest decision.

What will happen to inflation?

Inflation is now expected to average 0.1% and 0.3% points higher in 2013 and 2014, at 5.9% and 5.5%, while the forecast for 2015 has been raised from 5.0% to 5.2%.

What will happen to growth?

Growth is expected to accelerate to 3.6% in 2015, compared with 3.8% previously. The Banks growth forecast for 2013 has been revised to 2.0% and for 2014 3.3%.

What will happen to the RAND?

The RAND currency has fallen nearly 20 percent against the dollar since the beginning of 2013, partly as investors balk at incessant strikes at mines which have slashed output in the world's largest platinum producer. “Even though the economy is underperforming, the central bank doesn't have the flexibility to cut rates further as inflation is out of comfort levels,” said Katrina Ell, an economist at Moody's Analytics in Sidney.

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