Repo rate unchanged, GDP forecast revised down

Posted On Thursday, 18 September 2014 19:59 Published by
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The Reserve Bank on Thursday kept the repo rate unchanged at 5,75% per annum amid concerns over inflation and economic growth.

Gill Marcus

The prime lending rate remain at 9,25%. South African Reserve Bank governor Gill Marcus made the announcement amid a domestic growth outlook that the Monetary Policy Committee described as weak.

Some economists had expected an interest rate hike on the back of a 6,4% consumer inflation data released on Wednesday.

The Bank's forecast for GDP growth for 2014 has been revised down further to 1,5 per cent, from 1,7 per cent previously, with the risks still assessed to be on the downside. The forecasts for both 2015 and 2016 have been revised down by 0,1 percentage points, to 2,8 per cent and 3,1 per cent respectively.

The Governor also announced stepping down.

"This is my last MPC. I have advised the president some time ago that I would not be available for renewal," Governor Gill Marcus said

Commenting on the decision to leave interest rates unchanged, eProp Managing Director, Mduduzi Ngwenya, says: "The MPC decision is widely welcomed in the market. Consumers can breath some relief and continue the rid-debt-fight. In the commercial property space, the announcement affords owners time to focus inward to minimise any impact of future rate increases. Prevailing weak economic conditions, revised tariff increases granted to Eskom by Nersa, makes for a 25 basis point increase should conditions not improve."

BetterBond CEO, Shaun Rademeyer notes, "there will be no increase for now in car instalments, credit card repayments or other debt commitments, and this will bring some relief to consumers who are battling to cope with considerably higher food, fuel and utility costs at this time.

"The decision by the Monetary Policy Committee to keep the repo rate stable is good news, particularly for mortgage-dependent homeowners and aspirant home buyers requiring access to finance, says Dr Andrew Golding, chief executive of the Pam Golding Property group.

The repo rate – the rate at which the central bank lends money to commercial banks – was hiked by 50 basis points to 5.5% in January 2014. It was increased by 25 basis points to 5.75% in July.

Last modified on Thursday, 18 September 2014 21:23

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