SA repo rate remains unchanged

raised its inflation forecast and struck a bullish tone on growth.
The Monetary Policy Committee’s hawkish tone suggests that rates will start increasing before the end of the year, as many analysts anticipate.
However, Governor Gill Marcus declined to comment on the timing of any rate increase.
Marcus said inflation would probably average 4,7 percent this year and 5,7 percent in 2012, higher than previous forecasts of 4,6 and 5,3 percent respectively.
“The MPC is of the view that the risks to the inflation outlook are on the upside.
“However, these risks and underlying pressures are mainly of a cost-push nature,” she said.
The central bank cut the repo rate by 650 basis points between December 2008 and December 2010, taking borrowing costs to their lowest in more than three decades.
Thursday’s verdict was the second time it had left rates on hold.
All 21 economists polled by Reuters last week predicted the move.
On growth, the central bank said prospects appeared to have improved moderately and accordingly raised its GDP growth forecast for this year to 3,7 percent and 3,9 percent for next year.
“The domestic growth prognosis has improved and the recovery is expected to be sustained, although not at rates sufficient to make appreciable inroads into the unemployment situation in South Africa,” she said.
Consumption expenditure growth would remain relatively robust but was unlikely to accelerate to excessive levels in the short term, she added.
The rand was trading at 6 8960 against the dollar, from 6 8830 before the verdict.
The yield on the 2015 was barely changed at 7,78 percent from 7,75 percent beforehand. – Reuters