Business Maverick: South Africa Holds Key Rate as It Cuts GDP Growth

The Monetary Policy Committee’s unanimous decision to maintain the repurchase rate at 6.75 percent was in line with the expectations of all 18 economists in a Bloomberg survey. The bank cut its forecasts for growth in gross domestic product both this year and next, and sees growth in household expenditure slowing to just 1 percent in 2019, Governor Lesetja Kganyago said Thursday in the capital, Pretoria.

“Despite what the QPM suggests, I think this is a story of unchanged interest rates for quite some time,” said Elize Kruger, a senior economist at NKC African Economics. “If anything, headline consumer-price inflation could be lower than what they are forecasting — despite factoring in higher electricity, food and fuel prices the forecast is unchanged.

“The committee remains of the view that current challenges facing the economy are primarily structural in nature,” Kganyago said. “Given current economic vulnerabilities, prudent macroeconomic policies combined with structural reforms that raise potential growth and lower the cost structure of the economy, have become even more urgent.”

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