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REUTERS SUMMIT-South Africa's Gordhan praises central bank policy decisions
April 9, 2013 / 11:38 AM / 5 years ago

REUTERS SUMMIT-South Africa's Gordhan praises central bank policy decisions

(For other news from Reuters Africa Investment Summit, click here)

By Stella Mapenzauswa and Ed Cropley

PRETORIA, April 9 (Reuters) - South Africa’s central bank has done well to balance economic growth and the need to create jobs in its policy decisions, Finance Minister Pravin Gordhan said on Tuesday.

The Reserve Bank left the repo rate at a historic low of 5 percent last month, but the OECD has said the bank has room to loosen policy further to stimulate Africa’s biggest economy after a sluggish recovery from a 2009 recession. Most economists polled by Reuters expect rates to stay on hold through 2013.

The bank has kept rates on hold since a 50 basis point cut last July, saying the need to accelerate growth has been offset by a deterioration in the inflation outlook due to a sharp fall in the rand.

“They have done fairly well to take the economic growth and employment situation into account,” Gordhan said in an interview as part of a Reuters Investment Summit.

“They have been careful about balancing perceived risks on the one hand with the necessity to support the economy on the other hand. Let’s see what the next few months bring.”

South Africa’s central bank has an inflation target mandate of 3-6 percent but Gordhan in 2010 broadened its responsibilities to include economic growth and employment, although without specific targets.

Gordhan also said he saw “no immediate danger” to the foreign portfolio flows into local bonds which have helped plug a current account deficit of more than 6 percent of gross domestic product.

Increased flows in the last week have pushed the rand to 8.944 against the dollar, a five-week high, as global investors have sought yield after monetary easing from the Bank of Japan.

The currency hit a four-year low of 9.3655 on March 21 amid concerns about domestic industrial unrest, growth and the current account deficit. (Reporting by Stella Mapenzauswa and Ed Cropley; Editing by Matthew Tostevin)

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