Busa gives Reserve Bank repo rate decision the nod

Business Unity South Africa (Busa) said on Thursday it agreed with the decision by the Reserve Bank to leave interest rates unchanged for the time being, describing the decision as a realistic reading of external and internal economic factors.

“The domestic economic recovery is still modest and the global economic outlook remains uncertain,” the organisation said.

“Busa is still concerned about the extent to which continued rises in administered prices pose a risk to the inflation outlook. Unless a more coordinated approach is taken to decisions on administered prices, this trend will have a very negative impact on the cost structure of business. At a time where a number of key wage negotiations are under way, Busa also agrees that it is important that remuneration levels as a whole should remain reasonable and closely linked to productivity,” Busa stated.

It added: “Although on growth prospects for South Africa, the Reserve Bank has only slightly modified its growth forecast for 2011 from 3,7% to 3,6%, the fact remains that this revision is in a context in which inflation is now expected to breach the upper limit of the inflation target range in the first quarter of 2012.
This again emphasises the careful balance which monetary policy needs to keep in its decisions on interest rates.”—I-Net Bridge

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