Interest rates remain unchanged at 5.5%

The South African Reserve Bank (SARB) kept the repo rate unchanged at 5.5% on Thursday after a three-day monetary policy committee (MPC) meeting.

“The repo rate remains at 5.5% with the prime interest rate at 9%,” SARB governor Gill Marcus told reporters in Pretoria.

This is the seventh consecutive decision keeping rates unchanged, with the last change being a 0.5% drop in November 2010.

The move keeps interest rates at their lowest in over 30 years.

“[In] creating a stable environment, in [as far] as you can in uncertain and unstable conditions, the best move was to keep rates unchanged,” Marcus said.

Balancing act
Marcus said rates were left alone because of the rand’s continued volatility and growing fears within the global economy.

In 2012 the rand depreciated by over 18% against the greenback and the euro — pushing up import costs.

“Global outlook remains low due to economic turmoil in the eurozone where it is predicted there will be a recession in 2012,” Marcus said.

She also confirmed that inflation is expected to remain out of SARB’s target band of 3% to 6% with this being exacerbated by subdued demand.

Gina Schoeman, senior economist at Absa capital described SARB’s statement as “hawkish”, with the bank having to monitor any reason to push up rates.

Volatility remains a concern
“Inflation risks have moved higher and even though growth has been revised, rand volatility remains a concern,” Schoeman told the Mail & Guardian.

SARB expects inflation to remain above target this year, with 6.6% being forecast in the second quarter of 2012.

Accordingly, South Africa’s growth forecast for 2012 has been marked down to 2.8% from 3.2% and drops to 3.8% from 4.2% in 2013.

Dawie Roodt, chief economist at the Efficient Group described the move on growth forecasts as “aggressive”.

“SARB believes we are in a little more trouble than figures suggest. I believe otherwise but the bank is just being cautious,” Roodt told the M&G.

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever. But it comes at a cost. Advertisers are cancelling campaigns, and our live events have come to an abrupt halt. Our income has been slashed.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years. We’ve survived thanks to the support of our readers, we will need you to help us get through this.

To help us ensure another 35 future years of fiercely independent journalism, please subscribe.

Advertisting

Not a sweet deal, Mister

Mister Sweet workers say they will not risk their health, and the lives of others, to continue producing and packaging confectionaries

Covid-19 grounds Nigeria’s medical tourists

The country’s elites, including the president, travelled abroad for treatment but now they must use the country’s neglected health system

Nehawu launches urgent court bid over protective gear for health...

The health workers’ union says the government has rebuffed its attempts to meet about mitigating risks to workers

Stay at home, Cyril said. But what about the homeless?

In Tshwane, forcing homeless people off the street resulted in chaos and the abuse of a vulnerable population. In Durban, a smooth, well-planned operation fared far better

Press Releases

Everyone’s talking about it. Even Kentucky

Earlier this year South African fried chicken fast-food chain, Chicken Licken®, launched a campaign for their wallet-friendly EasyBucks® meals, based on the idea of ‘Everyone’s talking about it.’

New energy mix on the cards

REI4P already has and will continue to yield thousands of employment opportunities

The online value of executive education in a Covid-19 world

Executive education courses further develop the skills of leaders in the workplace

Sisa Ntshona urges everyone to stay home, and consider travelling later

Sisa Ntshona has urged everyone to limit their movements in line with government’s request

SAB Zenzele’s special AGM postponed until further notice

An arrangement has been announced for shareholders and retailers to receive a 77.5% cash payout

20th Edition of the National Teaching Awards

Teachers are seldom recognised but they are indispensable to the country's education system

Awards affirm the vital work that teachers do

Government is committed to empowering South Africa’s teachers with skills, knowledge and techniques for a changing world