South African Repo Rate Left Unchanged at 5.75%

November 20, 2014

Officials at the South African Reserve Bank, who had raised their key interest rate by 50 basis points in January and 25 bps in July, continued to refrain from a third tightening.  A released statement revised projected CPI inflation slightly lower (reflecting oil developments largely), predicted continuing weak growth next year, and observed persistent underlying price pressure that would keep core inflation above 5.0% in 2015 and 2016.  Further rate normalization is a matter of when, not if, and will depend on the evolution of expected inflation, Fed policy normalization, domestic economic conditions, and the performance of the rand.  The current account deficit has been receding only very slowly and remains a potential point of vulnerability for the exchange rate.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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