South African Reserve Bank: No Interest Rate Change Satisfies Expectations

July 18, 2013

The last cut the South African repo was implemented a year ago in July 2012.  The decrease of 50 basis points to a 40+ year low of 5.0% culminated a ten-step 700-basis point easing from 12.0% prior to December 2008.

South African officials remain constrained by weak economic growth on the one hand and a depreciating rand and elevated import price-fed inflation on the other.  GDP expanded only 1.9% in the year to 1Q13.  CPI inflation of 5.6% as of May was not far the top of the central bank’s 3-6% target range, and the rand’s slide of about 20% against the dollar since end-2012 poses the risk of more import price pressure.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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