South Africas central bank keeps repo rate unchanged at 5%.

By bne IntelliNews March 21, 2013
The South African Reserve Bank (SARB) said that it decided to keep its key repo rate unchanged at 5%, in line with market expectations. SARB said it continues to assess the monetary policy stance to be appropriately accommodative with further accommodation still constrained by upside risks to the inflation outlook. The last time SARB changed the rate was in July 2012, when the authority cut it by 50 basis points. Yesterday, the institution announced that now it expects average inflation of 5.9% this year and 5.3% in 2014, which compares with previous forecasts (announced in January) of 5.8% and 5.2%, respectively. Inflation is expected to peak at 6.3% in Q3 2013 and then to moderate gradually to 5.2% in Q4 2014. SARB noted that the exchange rate of the domestic currency is still the source of the main upside risk to the inflation outlook. The rand has depreciated by 8.4% against the US dollar year-to-date. The authority added that the trade-weighted depreciation was 5.6%, mainly due to the depreciation of the Japanese yen and the pound sterling against the US dollar. SARBs latest growth forecasts for 2013 and 2014 are 2.7% and 3.7%, respectively. The previous projections were for growth of 2.6% this year and 3.8% in 2014. The risks to the forecasts are seen to be on the downside.

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