South Africa Keeps Main Repo Rate on Hold -- Update

09/21/17 10:19 AM EDT
By Gabriele Steinhauser 

JOHANNESBURG--South African Reserve Bank on Thursday kept its main repo rate at 6.75% and revised its 2017 growth forecast up slightly.

Governor Lesetja Kganyago said three members of the bank's monetary policy committee had argued for a rate cut of 0.25 percentage point, while the other three wanted to hold rates. In the end, the committee decided to hold rates and reassess its monetary stance at its next meeting in late November, he said.

Many analysts had expected the SARB to lower interest rates, giving a slight boost to Africa's most developed economy, which the bank expects to grow just 0.6% this year. That latest growth forecast was a slight upward revision from the bank's previous prediction of 0.5%.

Consumer prices rose 4.8% in August from a year earlier, and the bank said it now expects inflation to remain within its 3% to 6% target range until at least the end of 2019. But Mr. Kganyago said the MPC was concerned that many trade unionists and business people still saw inflation close to or above 6% for the next two years.

"A number of risks to the inflation outlook have increased and the MPC assesses the risks to the inflation outlook to be somewhat on the upside, " he said.

Among the risks he cited was a decline in the value of the rand, political upheaval or an unexpectedly large increase in electricity prices.

South Africa has been shaken by a corruption scandal that has drawn in President Jacob Zuma and other members of the government ahead of December's election of a new leader for the African National Congress. The country could also see its credit-rating downgraded to junk status, leading to its expulsion from key global bond indexes.

Write to Gabriele Steinhauser at gabriele.steinhauser@wsj.com

 

(END) Dow Jones Newswires

September 21, 2017 10:19 ET (14:19 GMT)

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