adminPRETORIA – South Africa’s Reserve Bank Governor Gill Marcus left interest rates unchanged at 5.75 percent yesterday, as expected, saying the domestic growth outlook had deteriorated further.
She then announced she would be stepping down on November 8 at the end of her five-year term, sending the rand to 11.1095 against the dollar, its weakest since February. “Despite the 75 basis point increase so far this year, monetary policy remains accommodative and will continue to be supportive of the domestic economy subject to achieving its primary inflation-targeting objective,” Marcus said.
The bank hiked rates in January and July, trying to stem inflationary pressures in Africa’s most advanced economy. Two thirds of economists polled by Reuters last week anticipated rates to remain on hold at 5.75 percent to help support economic growth. The median forecast suggests a rise to 6.0 percent in November.
The bank expects the economy to grow 1.5 percent this year, down from its previous forecast of 1.7 percent.
Growth forecasts for the two years after that have also been reduced, with the bank saying platinum production was unlikely to return to full potential before the end of the year after a five-month strike.
The mining sector, now in recession, helped to drag the economy into a 0.6 percent contraction in the first quarter.
However, Marcus reiterated the bank was still in a hiking cycle but stressed any moves would be highly dependent on data. Inflation data released on Wednesday showed prices rose slightly in August, but the bank has forecast CPI may have already peaked in the second quarter, when it printed 6.6 percent in May.- Reuters.
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