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Interest rate stays at 5%

Gill Marcus says strikes and high wage settlements in the mining sector is affecting the economy.

Reserve Bank Governor Gill Marcus. Picture: AFP.

JOHANNESBURG - The South African Reserve Bank said on Thursday it is keeping interest rates on hold at five percent but is deeply worried about the state of South Africa's economy and the prospect of strikes and high wage settlements in the mining sector.

Reserve Bank Governor Gill Marcus said industrial disputes will affect investor confidence while high wage settlements will cost the country jobs and increase inflation.

She said all parties involved in talks must take this into account.

"At a time of high and rising unemployment and slowing growth the imperative in economy-wide commitment to wage and salary restraint at all levels including executive pay cannot be over emphasised."

Marcus said the Reserve Bank has cut its forecast for economic growth for the rest of this year and into next year.

She also said everyone involved in the economy must sit around the table and talk.

"There is an urgent imperative for all parties; government, business, labour and civil society to interact and address these issues and vulnerabilities at a national level. While the bank is prepared to play its part many of these challenges are beyond the role, scope and effectiveness of military policy."