Interest rate kept unchanged

The South African Reserve Bank kept the repo rate unchanged at 5% at its last monetary policy meeting of the year. Inflation concerns countered weak economic growth.

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The prime lending rate was left unchanged at 8,5%. Consumer inflation climbed in October to 5,6% on a yearly basis, from 5,5% in September, and threatened to break through the SARB’s target for inflation of between 3% and 6%. Economic growth forecasts for 2012 were in September cut to 2.6% from 2,7%, due to weak growth worldwide and disruptions in the mining sector through August.

Governor Gill Marcus said the weaker rand posed a further inflation risk. She said the rand had previously been influenced by external factors, but more recently domestic factors, such as the mining unrest have had an impact on the local unit. The rand had depreciated by 6,7% against the dollar since the last policy meeting in September.