South African Reserve keeps repurchase rate at 7% amid uncertainty

New York, Nov. 28 – The Monetary Policy Committee of the South African Reserve Bank kept its repurchase rate unchanged at 7% at its meeting on Thursday.

The committee was unanimous in its decision.

In announcing its position, the committee said it believes there is a “high degree of uncertainty” surrounding the “nature and timing of possible policy changes emanating from significant developments in the global economic environment.”

This uncertainty, it said, “creates a more challenging environment especially for emerging markets as evidenced in the recent changed pattern of capital flows.”

The bank believes it may be close to the current cycle of raising rates but at the same time inflation remains “uncomfortably close” to the upper end of its target range.

Inflation risk is now thought to be to the upside rather than the previous assessment of balanced, mainly due to the possible impact of adverse developments elsewhere on the exchang rate.

Still, the committee noted, “despite its high degree of volatility, the rand has displayed relative resilience in the face of numerous shocks over the past year.”

The outlook for domestic growth is unchanged and remains constrained by a backdrop of weak business and consumer confidence.

Internationally, the main change is the high degree of uncertainty about the economic policies of the incoming administration in the United States.

Recent positive sentiment towards emerging markets has reversed due to higher U.S. bond yields and expectations of monetary tightening by the Federal Reserve.

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