Repo rate unchanged

The Reserve Bank left its benchmark repo rate unchanged at 5%, citing concerns about rising food prices and a depreciating rand exchange rate in a period of slowing growth.

All 23 economists polled by Reuters last week forecast that the Reserve Bank’s monetary policy committee would leave rates unchanged at 40-year lows, with 10 economists expecting the next move to be a 50 basis point hike in 2014.

Peter Attard Montalto, emerging market economist at Nomura, said: “SA Reserve Bank monetary policy committee keeps rates on hold as expected in a statement that was broadly neutral.

More positive on global growth risks, but more bearish on domestic growth it would seem, while showing more concern by inflation (from wages in particular) versus last time.

“The growth-inflation conundrum continues, but with the rand doing this and the increased risks highlighted of wage pass through (something that got mentioned a lot), it seems they will now keep rates on hold for the next year and a half without a marked additional growth shock alongside the presence of no signs of a wage-price spiral.”

The rand weakened after the decision and traded at 9.0760 against the dollar 9.0355 just before governor Gill Marcus made her announcement.

The yield on the 14-year benchmark bond rose to 7.355% from 7.30% beforehand.

- Reuters