Reserve Bank Governor Lesetja Kganyago announced on Thursday that the country’s repo rate will stay at 5.75%.
The repo rate has remained the same since September last year, following a 25 basis points increase in July from 5.5%.
At the previous Monetary Policy Committee meeting in March it was decided that the repo rate would remain at 5.75%.
On the infaltion outlook Kganyago said on Thursday the main upside contribution came from coal and oil products. “The inflation forecast has changed – inflation is expected to average 4.9% in 2015.
“The forecast for core inflation has increased to 5.6% in 2015,” he said.
Kganyago listed currency depreciation, electricity price increases and salary increases as factors putting pressure on inflation targets.
“Some further pressure is likely on the exchange rate. The rand remains an upside risk to the inflation outlook, though tempered somewhat by the latest CPI,” he said.
Stats SA on Wednesday announced that South Africa’s consumer inflation has risen to 4.5% in April and not to 4.7% as widely expected.
“The consensus had expected 4.6% and we expected 4.7%. With food, alcoholic beverages and petrol prices rising in the CPI basket as Citi had expected, it was vehicle deflation – though only slight at 0.1% month-on-month – that surprised its April CPI forecast to the downside,” said global foreign exchange house Citi.