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Interest rates on hold

The prime lending rate will remain steady at 9.25 percent.

FILE: Reserve Bank governor Lesetja Kganyago. Picture: Reinart Toerien/EWN.

JOHANNESBURG - The South African Reserve Bank (Sarb)'s Monetary Policy Committee (MPC) has decided to leave interest rates unchanged, Governor Lesetja Kganyago revealed on Thursday.

The announcement was made in Pretoria following a three-day MPC meeting.

This means the repo rate, the interest charged for banks to lend money from Sarb, will stay fixed at 5.75 percent.

The prime lending rate, the interest charged by banks to consumers, will remain steady at 9.25 percent.

Kganyago says the MPC believes the inflationary outlook changed dramatically, driven mainly by declining international oil prices.

He says the bar for a cut in interest rates remains high.

"Having averaged 6.1 percent in 2014, inflation is now expected to average 3.8 percent in 2015, compared with the previous average of 5.3 percent."

Sarb is however concerned that higher than inflation wage increases and the weakness in the rand could lead to higher inflation.

Kganyago says the impact of lower oil prices isn't as big as it could have been because of load shedding.

"This effect is expected to be limited, in part, due to the possible constraining effects of load shedding on exports," the governor says.

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