by Stanley Karombo
PRETORIA, May 25 (Xinhua) -- South African Reserve Bank (SARB) governor Lesetja Kganyago announced on Thursday that the repo rate will remain unchanged at 7 percent.
The prime lending rate, which is the figure charged by banks to customers, will steady at 10.5 percent.
The SARB has since 2015 hiked the repo rates by 75 basis points, and at the starting of the year of 2014, by 200 basis points.
In January 2016, the SARB raised the repurchase rate by 50 point after the 25 basis points in March 2016.
Experts noted that the SARB held the repo rate on hold at 7 percent as widely expected after the slowdown of consumer inflation index to 5.3 percent year-on-year in April from 6.1 percent in March, according to figures released by Statistics South Africa on Wednesday.
The slowdown of the country's stubborn inflation had led the South African rand to firm to a new 4 week high. The rand has been resilient to the geopolitical situation in the country.
"A reduction would have provided a much-needed boost for consumer confidence and market sentiment given the ongoing weak economic growth experienced in South Africa," Andrew Golding, CEO of the Pam Golding Property group, told Xinhua.
The governor noted that the emerging markets is also generally positive. "Concerns about Chinese growth have dissipated somewhat following policy intervention, but high leverage in the financial sector remains a risk," the governor told a media conference in Pretoria.
"While Russia has emerged from recession, the expected recovery in Brazil may be undermined by current political uncertainty. The outlook for commodity producers may be tempered by recent weaker commodity price trends, particularly those of iron ore and coal," he added.
In the coming year, he expects inflation to moderate from 5.4 percent forecast in March, and in 2019 to remain within 5.3 percent from 5.5 forecast in March.
He said inflation had peaked at 6.4 percent in the first quarter, in line with the bank's earlier projections.
"Domestic economic growth prospects have deteriorated, as the impact of the ratings downgrade is expected to weigh on domestic investment and consumer sentiment over the forecast period," the governor said.
"The trajectory of the growth forecast is still positive, and the growth rate for this year is expected to exceed that recorded in 2016," he noted.
