Reserve Bank keeps rates on hold but warns of myriad risks
Despite the decision MPC strikes a more hawkish tone
The Reserve Bank held its key interest rate at a two-year low as the economy struggles through a recession and policy makers warned that investor sentiment toward emerging markets is a risk to the currency, while inflation pressures are mounting. The monetary policy committee voted to hold the repurchase rate at 6.5% on Thursday. Three of the MPC’s seven members votes to increase the rate by 25 basis points, a deviation from the July and May decisions, which were unanimous for holds. The Bank has had to walk a tightrope — balancing its goal of anchoring price growth close to the 4.5% midpoint of its target amid higher oil costs with the needs of a shrinking economy. The rand has lost 14% against the dollar this year as global trade wars and turmoil in other emerging markets fueled a sell-off in assets, complicating the bank’s task. “The MPC assesses the risks to the inflation outlook to be on the upside,” governor Lesetja Kganyago told reporters. The price-growth trajectory is movin...
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