South Africa interest rates unchanged

Reserve Bank governor Gill Marcus says the repo rate will remain unchanged in spite of a breach in the South African Reserve Bank’s forecast inflation rate. The repo rate remains at 5,5%, said Marcus today.


Addressing the media after a meeting of the Monetary Policy Committee in Pretoria, Marcus said the rate of inflation is slightly higher than forecast and is now expected to peak at 6,3% by the beginning of next year.

Interest rates

"Price shocks could feed through to generalised inflation. The MPC will monitor closely for any secondary effects and will respond timeously should these effects change inflation rapidly," she said. "The Main driver is food price inflation which rose 5,1% year on year in March."


"The MPC continues to be of the view that the underlying inflation pressures are mainly of a cost push nature. These developments are expected to result in a temporary breach of the upper limit of the target band during the first quarter of 2012," said Marcus.


"It is recognised that these pressures have the real potential to generate second round effects which can result in more generalised inflation. In light of the above, the MPC has decided to keep the repurchase rate unchanged at 5,5 per cent per annum, for the time being."


"The MPC will remain vigilant with respect to any inflation risks that could emanate from domestic demand developments."


Source - BusinessDay.co.za
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