The South African Reserve Bank kept its benchmark interest rateunchanged as concerns about slowing economic growth outweigh inflation worries.
The repurchase rate was kept at 5.75 percent, Governor Gill Marcus told reporters in Pretoria today. Seventeen of the 24 economistssurveyed by Bloomberg predicted the decision, while the rest forecast a 25 basis-point raise.
Policy makers paused after raising borrowing costs by 75 basis points this year to help bolster an economy battered by strikes and support investor confidence as the threat of credit-rating downgrades loom. The rand’s slide below 11 to the dollar last week, the weakest level in seven months, is complicating the outlook, adding to pressure on inflation as it stays above the central bank’s 3 percent to 6 percent target.
The “Reserve Bank is unlikely to be too concerned at this juncture that demand-driven inflationary pressures are getting out of hand,” Jeffrey Schultz, an economist at BNP Paribas Cadiz Securities in Johannesburg, said in an e-mailed note to clients before the rates decision.
Strikes at platinum mines and manufacturers this year curbed growth in Africa’s second-largest economy, weakened demand and prompted credit-rating companies to downgrade the nation’s debt. Citigroup Inc. this week cut its growth estimate for 2014 to 1.4 percent from 1.7 percent.
The rand has lost 3.3 percent against the dollar in the past month, taking its decline since the start of 2013 to 23 percent. The currency came under pressure on Sept. 9, when the central bank reported a current-accountdeficit of 6.2 percent of gross domestic product in the second quarter, exceeding all but one of 17 economist forecasts in a Bloomberg survey.
A weaker rand and higher food prices pushed up the inflation rate to 6.4 percent in August from 6.3 percent in the previous month.
