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Interest rates unchanged

Governor Gill Marcus says the bank will keep the repo rate on hold at five percent.

FILE: Reserve Bank Governor Gill Marcus. Picture: AFP.

JOHANNESBURG - The repo rate will remain unchanged at 5 percent, South African Reserve Bank (Sarb) Governor Gill Marcus announced on Thursday.

Analysts widely expected rates to remain on hold, as has been the case over the past few Monetary Policy Committee (MPC) meetings.

There have however been calls for the central bank to slash rates to stimulate the slowing economy.

Marcus made the announcement at the Sarb headquarters in Pretoria this afternoon.

Statistics South Africa on Wednesday said Consumer Price Index (CPI) slowed to 5.5 percent year-on-year in October, slightly lower than expected.

This means inflation is in Sarb's target range of between three and six percent.

"Despite this favourable development, inflation is expected to remain uncomfortably close to the upper end of the target band," Marcus said.

Investment Solutions Chief Strategist Chris Hart says this decision shows the difficult position the bank is in.

"They are in a bit of a fix because inflation is high. However, the economy is extremely slow and sluggish, what do you do? This is the dilemma that they face."

Hart also says the possibility of tapering in the US is bearing down on the bank.

Any slowdown in stimulus will have a major impact on weakening the rand.

For the MPC's full statement, click here.