South Africa: Reserve Bank retains benchmark rate
The move is necessary to keep price growth under control and encourage borrowers.The Monetary Policy Committee (MPC) of South Africa's Reserve Bank has retained the benchmark rate at 7 percent for a fifth straight time despite escalating inflation forecast. The development was announced by the Reserve Bank Governor, Lesetja Kganyago last Tuesday in Pretoria. The bank has kept the benchmark rate unchanged since March 2016 after raising it by 200 basis points since 2014. The decision of MPC is necessary to keep price growth within the Central Bank's target of 3 percent to 6 percent and encourage borrowers despite economic pressures. Recently, the
South African banking system has been affected by slow economic growth, domestic and international political uncertainties. In 2016, South Africa's economy expanded by 0.4 percent which is the lowest since 2009. For 2017, the MPC has cut its forecast to 1.1 percent from 1.2 percent.