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Reserve Bank of South Africa Left Rates on Hold


May, 26 2017
watermark Economic news

The South African Reserve Bank kept its interest rates unchanged on Thursday as it played down the thought of a lower cost of borrowing that further influenced the price pressures versus the projections regarding a much slower recovery of the economic struggle

Reuters polled 26 economists last week have forecasted that the benchmark repo rate will remain at 7 percent as  Lesetja Kganyago, the Bank Governor stated that the constricting cycle is over.

He added that the yearly CPI inflation fell to 5.3 percent in April, however,  there is still a possibility that risk might emerge again, especially the pressure relative to the rand currency due to uncertainties in domestic politics along with the downgrades in the debt ratings.

As the Fitch Ratings Ltd and S&P Global Ratings decided to cut South Africa into a junk status while Moody’s reviewed the downgrade following the cabinet reorganization wherein Pravin Gordhan was dismissed from his job as the finance minister.

The central bank hopes that the inflation will hit 5.7 percent for 2017 and will acquire 5.3 percent in 2018, with its target that ranges from 3 to 6 percent.

The ZAR increased on the back of the rate decision reaching 12.8600 per USD to 0.5 percent stronger. The government bonds, on the other hand, lose its strength.

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Foreign exchange trading carries a high risk of losing money due to leverage and may not be suitable for all investors. Before deciding to invest your money, you should carefully consider all the features associated with Forex, as well as your investment objectives, level of experience, and risk tolerance.