Ten main factors why the Reserve Bank has left repo rate unchanged

2015-03-27 00:00

THE South African Reserve Bank left the repo rate, which determines interest rates, unchanged at 5,75% yesterday.

Below are 10 of the main factors that helped inform the Monetary Policy Committee decision:

1. The more favourable inflation environment has allowed some room to pause with interest rate increases.

2. The rand exchange rate continues to remain vulnerable to U.S. monetary policy.

3. The spot price of maize has increased by about 30% since the beginning of the year. Meat prices have also remained elevated.

4. Severe drought in some of the maize areas of the countries.

5. Public sector wage settlement is still not agreed and the outcome may impact the economy in 2015.

6. Growth across all main categories of credit extension to households has remained subdued.

7. Confidence of retailers, particularly of durable goods, remains relatively high.

8. Retail and wholesale trade sales declined on a month-to-month basis in January and the outlook remains uncertain.

9. Business confidence declined to below the neutral level in the first quarter of 2015.

11. Electricity supply constraint is likely to persist for some time.

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