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Business Welcomes Interest Rate Decision

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Business has welcomed the Reserve Bank’s decision to keep the repo rate at 5.5 percent.

The central bank on Thursday, following its first meeting of the year, decided to keep rates as is.

“BUSA [Business Unity SA] shares the overall economic assessment offered by the Bank today and on a balance of risks, BUSA supports the decision to leave interest rates unchanged as being an acceptable one in the circumstances.”

BUSA also agreed with the Reserve Bank that the current economic recovery is modest and vulnerable, with a growth rate of about 3.4 percent this year. This after the bank adjusted its growth forecast marginally for this year.

“There is general agreement that South Africa needs to aim at a much stronger growth rate in the years ahead,” it said.

Last November, the Reserve Bank slashed the repo rate by 50 basis points, reducing it to its lowest in 30 years. Since December 2008, the repo rate has been cut by 650 basis points.

Analysts had predicted that the repo rate would remain unchanged. “The MPC’s decision was expected. Recent data have suggested that the economic recovery is gaining some traction, while inflation has remained under control. Indications are that the SARB has reached the end of its cutting cycle,” said the Nedbank Economic Unit.

The unit said another cut in interest rates would require negative growth surprises locally and globally or that the rand appreciates significantly.

The next interest rate decision is expected in March. – BuaNews

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Alan Straton

Chief Cook, Bottle Washer and Broom Mechanic at MyPE
Passionate about Port Elizabeth and definitely NOT packing for Perth. Alan's ethos is epitomised in the words of Nelson Mandela; "I have fought against white domination and I have fought against black domination. I have cherished the idea of a democratic and free society. If need be, it is an ideal for which I am prepared to die." See more articles by Alan.