South African Reserve Bank Holds Policy Rate at 5.50%

The South African Reserve Bank [SARB] kept its monetary policy interest rate, the repo rate, on hold at 5.50%.  The Bank said: "Domestic economic growth is expected to remain below potential. In light of this and the expected medium-term inflation trajectory, the Committee is of the view that at this stage the current stance of monetary policy is appropriate to support the real economy while at the same time maintaining its commitment to achieve the inflation target over the medium term. The Monetary Policy Committee has therefore decided to keep the repurchase rate unchanged at 5,5 per cent per annum."

Previously the SARB also held the repo rate unchanged at its January meeting this year, the Bank last cut the repo rate by 50bps to 5.50% in November 2010.  South Africa reported annual inflation of 6.1% in December, compared to 5.7% in September, 5.3% in August and July, 5% in June, 4.6% in May, and 4.2% in April this year, compared to its official inflation target range of 3-6%. 

South Africa's economy grew 1.3% in the June quarter, and 1.4% in the September quarter of 2011.  Meanwhile the South African Rand (ZAR) has weakened by about 10% against the US dollar over the past year, with the USDZAR exchange rate last trading around 7.66

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