Rand strengthens against dollar, pound after Sarb leaves repo rate unchanged
Governor Lesetja Kganyago says growth looks set to remain extremely low in the near term.
JOHANNESBURG - The rand has strengthened substantially against the dollar and pound after the South African Reserve Bank (Sarb) decided to keep interest rates unchanged at 7 percent.
At around 7pm, it was trading around 14.24 to the dollar, 18.82 to the pound and 15.66 to the euro.
However, Sarb Governor Lesetja Kganyago also announced that growth for this years is expected to be zero percent, which is worrying for job creation.
He says growth is a major concern, and inflation is expected to only stabilise next year.
"Inflation is still expected to accelerate further this year, and is only expected to return within the target range of three to six percent during the second quarter of 2017."
Kganyago says there is some encouraging news with food prices showing signs of recovery.
"There are some encouraging signs of moderation in some food categories, at both the consumer and producer price levels, and future prices of grains have declined markedly."
Kganyago says growth looks set to remain extremely low in the near term, forecasting an outlook for 2016 of zero percent.
He says there are still a number of challenges facing the economy, which include the drought and international factors including the Brexit.
The governor says growth this year got off to a slow start.
"The domestic economic growth outlook remains challenging following the contraction in GDP in the first quarter of this year."
He says the economy has battled to recover.
"Although this has been anticipated to have been the low point of the cycle, the recovery is expected to be good."
Kganyago says job creation will continue to battle if growth remains low.
"These trends have contributed to the persistence of high rates of unemployment in the country."