The Reserve Bank erred on the side of caution and kept interest rates on hold.
Reserve Bank governor Lesetja Kganyago. Most South Africans would favour an interest rate cut and low inflation supports this and also stimulates the economy. But the monetary policy committee was not convinced and voted to keep rates on hold.The Reserve Bank erred on the side of caution and kept interest rates on hold on Thursday, even as it revised down its economic growth forecasts.
The Bank left its inflation forecast unchanged since its September meeting — estimating inflation will average 4.2% in 2019, 5.1% in 2020, and 4.7% in 2021. “Although GDP growth rebounded to 3.1% in the second quarter, longer-term weakness remains a serious concern,” governor Lesetja Kganyago said in a statement. The outcome for the third quarter’s GDP reading is expected to be weak, Kganyago said, based on recent short-term indicators for the mining and manufacturing sector.
The Bank lowered its growth forecasts to 0.5% for 2019 from the previous 0.6%. It also revised down its expectations for 2020 and 2021 to 1.4% and 1.7%, respectively.
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