SARB keeps repo rate at 5 percent

By Staff Writer

Today the South Africa Reserve Bank (SARB) announced that it would keep the repo rate unchanged at 5%. “We will continue to monitor developments carefully on an ongoing basis and remain committed to act as required. The MPC has decided to keep the repurchase rate unchanged at 5, 0 per cent per annum at this stage,” said Gill Marcus governor of the SARB.


This news comes as no surprise as all 21 of the economists reviewed by Reuters predicted this outcome. This means that interest rates have remained at the same level since August of 2012.


“Domestic growth outlook remains fragile, with third quarter growth expected to have been adversely affected by the protracted work stoppages in the mot vehicle sector in particular, which also contributed to the decline in exports. Both business and consumer confidence remain at low levels,” said Marcus.


She added: “The MPC therefore continues to face the dilemma of upside risks to inflation against a backdrop of weaker growth outlook and a possible further depreciation of the currency.”


Last month, finance minister Pravin Gordhan cut the economic growth forecast for this year to 2.1%, saying that South Africa would be affected by weak global demand, disruptions from strikes and electricity shortages.

Bank reaction
First National Bank (FNB) said it will maintain its prime lending rate at 8.5% following the decision to keep rates on hold until the next meeting of the SARB Monetary Policy Committee.


“While rates remain unchanged at historic low levels, we note consumers are being cautious when taking new loans.  I urge all consumers to act with care and plan ahead for 2014; January typically places additional burdens on household budgets. Certain loans can be consolidated at lower rates via our Credit Card division and investors should consider higher-yielding accounts such as inflation-linked products,” said Jacques Celliers, CEO-designate of FNB.

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