|
||||||||||||||||||||||||||
|
South African Central Bank Leaves Key Rate Unchanged at 12%
2008-08-14 13:14:38.220 GMT Aug. 14 (Bloomberg) -- South Africa's central bank left its benchmark interest rate unchanged after six increases since June last year curbed consumer spending in Africa's biggest economy. The repurchase rate will remain at 12 percent, Governor Tito Mboweni said in a televised speech from Pretoria today. The decision was forecast by 21 of the 26 economists surveyed by Bloomberg. The Reserve Bank, battling to bring inflation into the 3 percent to 6 percent target range, has raised the key rate to a five-year high, crimping spending on cars, furniture and other goods. Rates may have eked now after a month-long decline in oil prices and a rally in the rand, combined with the higher borrowing costs, eased pressure on prices. "Monetary policy has achieved its aim of bringing down domestic demand," Jac Laubscher, group economist at Sanlam Ltd., the biggest South African-owned life insurer, said before today's decision. "The way the oil price has been behaving, it's possible we can get back into the target by next year." Vehicle sales plunged at annual 20 percent in July, after dropping 21 percent in the previous month, an industry body said on Aug. 4. Retail sales fell for a fourth consecutive month in June, declining 2.6 percent from a year ago, the statistics office said yesterday. Moody's Investors Service said on July 8 the economy may "veer towards recession" by the end of the year, forecasting that economic growth will slow to 3.2 percent this year, down from 5.1 percent in 2007. The economy expanded 2.1 percent in the first quarter, the slowest pace in more than six years. Crude oil prices have declined 21 percent from a high on July 11, while the rand has gained 3.3 percent against the dollar since the last Monetary Policy Committee meeting on June 12. Those changes are yet to impact on inflation. Price growth climbed to an annual 11.6 percent in June, the highest in at least a decade. While the bank is concerned this may boost wage demands, monetary policy is focused on the outlook for inflation, rather than the most recent data published, Mboweni said on Aug. 5. "Although we expect a surge in the July inflation number, that is water under the bridge," Johan Rossouw, chief economist of Vunani Securities in Cape Town, said before today's rate decision. Helping the inflation outlook are planned changes to the measurement of the consumer price index next year. The statistics office said on July 1 it will reduce the weighting of food in the CPI, possibly lowering the inflation rate. |