November 21, 2019 / 1:11 PM / 17 days ago

HIGHLIGHTS-South African central bank comments on rate decision

PRETORIA, Nov 21 (Reuters) - Below are comments from South African Reserve Bank (SARB) Governor Lesetja Kganyago on Thursday as he announced the central bank’s latest decision on its benchmark repo rate.

DECISION

“The MPC decided to keep the repurchase rate unchanged at 6.5% per annum. Three members preferred to keep interest rates on hold and two members preferred a cut of 25 basis points.”

“In this persistently uncertain environment, future policy decisions will continue to be highly data-dependent, sensitive to the balance of risks to the outlook, and will seek to look through temporary price shocks.”

INFLATION

“Recent monthly inflation has been lower than the mid-point of the inflation target range, as owners equivalent rent, food and services inflation remain subdued.”

GLOBAL: “Downside risks from heightened trade tensions and geo-political developments remain.”

“Food price inflation continues to surprise on the downside on a monthly basis, and is expected to peak at about 6.1% in the third quarter of 2020.”

GROWTH

“Despite a rebound in local GDP in the second quarter of this year, indicators suggest that economic activity will remain weak for the rest of the year.”

“Although GDP growth rebounded to 3.1% in the second quarter, longer-term weakness in most sectors remains a serious concern.”

“Based on recent short-term economic indicators for the mining and manufacturing sectors, the third-quarter GDP outcome is expected to be weak.”

“Public-sector investment has declined, export growth remains low, where government and household consumption continue to grow, albeit modestly.”

“The forecast of GDP growth for 2019 is revised lower at 0.5% (from 0.6%). The forecasts for 2020 and 2021 have decreased to 1.4% (from 1.5%) and 1.7% (from 1.8%) respectively, due to lower growth than previously expected in the third and fourth quarters and downward revisions to global growth.”

RAND

“While the rand has benefited from improvements in global sentiment, investors remain concerned about domestic growth prospects and fiscal risks.”

Reporting by Mfuneko Toyana and Naledi Mashishi; editing by Tanisha Heiberg, Larry King

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