PRETORIA: South Africa's Reserve Bank kept its benchmark repo rate unchanged at 7 percent on Thursday, with a weak economic growth outlook balancing out its concerns about the inflation trajectory.
The bank's Monetary Policy Committee (MPC) revised its forecast for growth in Africa's most industrialised country to 0.4 percent this year having said in July that the economy was expected to remain at a standstill.
Inflation is expected to average 6.4 percent this year, slightly down from an earlier forecast of 6.6 percent, the central bank said, in line with its target of between 3-6 percent.
"Given improvements in the inflation forecast, the weak domestic economic outlook and the assessment of the balance of risks, the MPC has unanimously decided to keep the repurchase rate unchanged," Governor Lesetja Kganyago told a news conference.
"The MPC is of the view that should current forecasts transpire, we may be close to the end of the tightening cycle," Kganyago said. Kganyago, however, said the MPC was still concerned about the overall inflation trajectory, which remained in the upper end of the inflation target range. In a Reuters poll about a week ago, 24 of 28 economists expected the central bank to hold the benchmark rate while the remainder pencilled in a 25 basis-point hike.
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