South Africa’s credit growth rose slightly to 19,74% year-on-year in May, slightly above forecasts, data showed on Monday, and unlikely to influence an interest rate verdict in August.
Central bank data showed credit demand grew from a slightly revised 19,63 in April, while the broadly defined M3 measure of money supply also came in above forecasts at 20,90% in the same month, also above forecasts, from 21,10 previously.
The Reserve Bank has raised the key repo rate by five percentage points to 12% since June 2006.
Analysts said higher borrowing costs had slowed demand for credit. After reaching a high of 27,48% in October 2006, growth has moderated but remains high at levels around 20%.
Monetary authorities will however, pay more attention to higher inflation when they meet in August.
”Pretty neutral as far as the impact on interest rates. The credit number is marginally higher [but] the inflation number is the tell-tale sign that the Reserve Bank will probably hike rates next month,” said Colen Garrow, economist at Brait Merchant Bank.
CPIX inflation rose to a five-and-a-half year high of 10,9% year-on-year in May, outside the 3% to 6% desired level for the 14th month in a row.
The Reserve Bank has said high household debt is a potential source of vulnerability and the growth in non-performing loans must be closely monitored.
Household debt stood at a record 78,2% of disposable income in the first quarter of 2008 from 77,6% in the fourth quarter of 2007.
The rand was little changed against the dollar at 7,90 against the dollar, from 7,8950 before the data. The yield on the 2015 bond was slightly higher at 10,71%, from 10,69 shortly before the numbers were released. – Reuters