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Reserve Bank to look into inflation rate amid sluggish growth

The Monetary Policy Committee will meet to decide whether the rate should be increased.

FILE: The Monetary Policy Committee will meet to decide whether the rate should be increased. Picture: Reinart Toerien/EWN

JOHANNESBURG - The South African Reserve Bank will be looking at inflation, the weaker rand and overall growth when deciding on the repo rate this week.

The Monetary Policy Committee (MPC) is meeting to decide whether the rate should be increased, which is bad news for consumers with debt.

An announcement is due tomorrow afternoon.

Reserve Bank Governor Lesetja Kganyago has warned that the MPC will have no choice but to increase the repo rate once again, if inflation continues to climb.

However, Nedbank economist Isaac Matshego says inflation is still in the three to six percent range.

"We still expected to be below 6 percent and that should give the MPC some room to leave interest rates unchanged.

He says despite the weak rand, prices have deceased.

"Since the last meeting, we had two months of price cuts and that sort of keeps inflation under control."

Emerging market currencies have been drastically affected by a US interest rates decision and developments in China.

At its last meeting in July, the Reserve Bank hiked the repo rate by 25 basis points to 6 percent and while those with investments were celebrating, this added to the burden of South Africans already facing mounting debt.