The Reserve Bank Gives Economic Growth a Fighting Chance as it Refrains from Raising Interest rates

SOUTH AFRICA - Report 24 Jan 2017 by Iraj Abedian

In a move that did not surprise the markets, the South African Reserve Bank’s Monetary Policy Committee unanimously decided to keep the repo rate at 7% per annum, leaving the prime overdraft rate at 10.50%.

The latest inflation data (December 2016) shows an acceleration in the inflation rate (from 6.6% in November to 6.8%) despite expectations for inflation to have moderated over the period. As we indicated in our Quarterly Outlook, which was released earlier today, the Reserve Bank was bound to leave the benchmark interest rate unchanged in spite of these developments, in order to give the economy some room to recover.

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