South Africa holds rates as inflation gains pace

By AFP
Previous |  Next 
By AFP

3/20/2013 12:40:03 PM -

JOHANNESBURG (AFP) - South Africa's central bank held off cutting interest rates to boost the continent's largest economy Wednesday, as rising inflation bound the hands of policymakers.

South African Reserve Bank governor Gill Marcus announced interest rates would remain at five percent despite a bleak economic outlook.

South Africa is struggling under weak growth and crippling underemployment.

"Further accommodation remains constrained by the upside risks to the inflation outlook," Marcus said explaining the decision.

She cited "excessive" wage increases in the wake of labour unrest and the weak rand as factors fuelling damaging inflation.

The rand has lost around 20 percent of its value against the dollar in the last year.

"Risks posed by the depreciation of the rand exchange rate have overshadowed the more favourable developments, including lower electricity price increases and some moderation in food price inflation."

Earlier Wednesday official data showed South African consumer inflation jumped to 5.9 percent in February, pushed higher by transport costs, health insurance and food basics like milk, eggs and cheese.

Statistics South Africa reported that inflation ticked a half-point higher, to come within striking distance of the reserve bank's six percent ceiling.

Marcus admitted that inflation may average 6.3 percent in the third quarter of the year.

Even ahead of the announcement Adriaan du Toit of Standard Bank said there was "zero probability" of the bank cutting interest rates to boost the economy.

Traders have begun to chatter about the possibility of a rate increase.

Recommend what is good or right and condemn what is wrong.
By: Kyei-Afrifa Mannhei

South Africa's life expectancy jump

A nurse (L) at an anti-retroviral clinic in the town of Winterton, South Africa explains to a patient how she should take anti-retroviral drugs on March 11, 2008.  By Alexander Joe (AFP/File) Thursday, July 31, 2014

Johannesburg (AFP) - Life expectancy in AIDS-hit South Africa has shot up sharpl ...
read more »

South Africa's metal workers call o

Striking workers hold placards as they demonstrate during a nationwide strike called by the National Union of Metalworkers of South Africa (NUMSA) in Johannesburg on July 1, 2014.  By Mujahid Safodien (AFP/File) Monday, July 28, 2014

Johannesburg (AFP) - South African striking engineering and metals workers have ...
read more »