Reserve Bank leaves rate unchanged

2012-03-29 14:38

The South African Reserve Bank has left the repo rate at 5.5% at its second monetary policy committee meeting this year, indicating that it is satisfied with the pace of the country’s economic recovery.

Reserve Bank governor Gill Marcus has repeatedly warned of the risks posed by rising inflation, and the market expects a rate increase sometime this year.

However, consumer inflation slowed unexpectedly to 6.1% year-on-year (y/y) in February – easing back towards the Reserve Bank’s 3-6% target band after breaching it in November. Producer inflation slowed to 8.3% y/y in February from 8.9% in January.

The central bank has left its repo rate unchanged at 5.5% for the past 16 months, after reducing it by 650 basis points in the two years to end-2010.

All 24 economists polled by Reuters last week expected the Reserve Bank to keep the repo rate at 30-year lows.

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