The South African Reserve Bank’s Monetary Policy Committee has resolved to leave the repurchase rate unchanged at 7%, citing several influences including a resilient rand.
“Since the previous meeting of the MPC, the near-term inflation outlook has deteriorated, but the longer-term outlook is more or less unchanged,” it says in a statement released on Tuesday. “The expected inflation profile has been negatively affected by higher international oil prices and a persistence in elevated food price inflation despite improved rainfall in many of the drought-stricken regions.”
Meanwhile, it adds, the rand has managed risks well, remaining resilient. These risks, however, “could re-emerge at any stage”.
As stated earlier this week, the Consumer Price Index has risen to 6,8%, a higher figure year-on-year. Food inflation, meanwhile, has once again peaked at 12%.
“The inflation forecast of the Bank has deteriorated since the previous meeting of the MPC,” it notes. “Headline inflation is now expected to only return to within the target range during the final quarter of 2017, and to average 6,2 per cent for the year, compared with 5,8 per cent in the previous forecast.”
Based on these factors, among several others, the MPC has once again left the repo rate untouched – for now.