South African Central Bank leaves key rates unchanged

By Hassan Isilow

PRETORIA, South Africa (AA) - South Africa’s Central Bank on Thursday announced it would keep key interest rates unchanged, regardless of a higher-than-expected headline inflation of 6.4 percent in October.

Reserve Bank Governor Lesetja Kganyago told reporters the repo rate would remain at 7 percent while the prime lending rate will hold at 10.5 percent.

The repo rate is the rate the bank uses to lend money to commercial banks. The prime rate is what banks charge for lending money to customers.

“The year-on-year inflation rate as measured by the consumer price index (CPI) for all urban areas measured 6.1 percent and 6.4 percent in September and October respectively, compared with 5.9 percent in August,” Kganyago said.

The maintenance of the lending rates is good news for South Africans who want to borrow money from banks.

Kganyago said food price inflation increased to a high of 12 percent but he hoped it would moderate in 2017.

South Africa has been grappling with a drought since last year that has affected harvests, forcing the country to import food to fill gaps.

Kganyago also said financial markets are expected to remain uncertain for some time, stating that the result of the recent U.S. presidential election effected the domestic bond and foreign exchange markets.

He said the U.S. presidential election had created a high degree of uncertainty surrounding the economic policies of the new administration, and it is expected to persist for some time.

South Africa is currently facing slow economic growth and high unemployment.