South Africa’s central bank left its main interest rate on hold at 6.5 per cent on Thursday in a unanimous decision.
The majority of economists polled by Reuters had predicted that the South African Reserve Bank would leave the rate on hold.
South Africa has seen benign inflation outcomes this year, but growth has been sluggish.
However, the South African Reserve Bank (SARB) Governor Lesetja Kganyago on Thursday as he announced the central bank’s latest decision on its benchmark report rate insisted that “the medium-term inflation outlook is largely unchanged.
“Electricity, food and fuel price inflation continue to shape the near and medium-term trajectory of headline inflation,” he added.
In the second quarter of this year, Kganyago said the South Africa’s GDP rebounded from the contraction experienced in the first quarter, but economic activity levels still remain weak.
“While global growth remains resilient, recent indicators on trade and manufacturing have deteriorated and a range of downside risks to growth remain.
“Based on recent short term economic indicators for the mining and manufacturing sectors, the third quarter GDP outcome is expected to be muted.
“The QPM (Quarterly Projection Model) assesses the rand to remain slightly undervalued. While the rand has benefited from improvements in global sentiment, investors remain concerned about domestic growth prospects and fiscal risks,” the governor said.
