Views Article – Sharenet Wealth

Africa, Forex

South Africa keeps rates flat as inflation risks balanced

(Adds detail, context, quotes)

JOHANNESBURG, Jan 21 (Reuters) – South Africa’s central bank kept its main lending rate at 3.5% on Thursday, saying overall risks to the inflation outlook appeared to be balanced in the near and medium term.

Three members of the monetary policy committee wanted to hold the repo rate and two preferred a 25 basis point cut, Governor Lesetja Kganyago said.

The decision was in line with a Reuters poll published last week.

“The committee notes that the slow economic recovery will help keep inflation below the midpoint of the target range for this year and next,” Kganyago added, referring to the bank’s 3% to 6% target range.

The South African Reserve Bank cut interest rates by a cumulative 300 basis points last year to cushion the impact of the COVID-19 pandemic.

Inflation in Africa’s most industrialised economy has been benign, giving the bank space to be accommodative.

“Monetary policy has eased financial conditions and improved the resilience of households and firms to the economic implications of COVID-19,” Kganyago said.

“Economic and financial conditions are expected to remain volatile for the foreseeable future. In this highly uncertain environment, policy decisions will continue to be data dependent and sensitive to the balance of risks to the outlook.”

(Reporting by Olivia Kumwenda-Mtambo and Alexander Winning Editing by Gareth Jones)

© 2019 Thomson Reuters. All rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. "Reuters" and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.