JOHANNESBURG: South Africa's central bank left its benchmark interest rate unchanged at 5.75 percent on Thursday after the global drop in oil prices helped ease inflation.
The decision was expected by economists following a decline in consumer inflation in the second half of 2014 as domestic petrol prices fell.
But Reserve Bank governor Lesetja Kganyago said the positive impact would depend on the persistence of the oil price decline.
"Even a moderate increase in oil prices going forward will reverse the favourable inflation trajectory, and the inflation and growth benefits, while welcome, are expected to be temporary," he said.
The positive impact of lower petrol price were also being offset by persistent power cuts across the country as electricity provider Eskom battles ageing infrastructure and excess demand, he said.
With the likelihood of daily power cuts high for most of the first half of 2015, the bank has revised its growth forecast down from 2.5 percent to 2.2 percent for the year.
Analysts said the lower fuel prices could slash consumer inflation to 3.5 percent this year from to 6.1 percent in 2014.
"This, in turn, leads us to believe that the SARB will keep rates unchanged through the entire 2015," First National Bank said in a note Thursday.
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