Repo rate unchanged at 7%, growth forecast shock

The bank also left the repo rate unchanged at the May meeting of its Monetary Policy Committee.

Lesetja Kganyago. Picture: AFP.

JOHANNESBURG - South African Reserve Bank (Sarb) governor Lesetja Kganyago has announced the bank will leave the repo rate unchanged at seven percent.

The prime lending rate, the figure charged by banks to customers, will remain at 10.5 percent.

Kganyago cited inflation as a major concern, saying it's not expected to stabilise in the near term.

He says the stronger rand has helped to keep inflation in check.

The governor says the bank will continue to monitor growth and inflation as severe drought, the Brexit and other international events have affected the overall outlook.

"The assessment of the balance of risks to the inflation outlook, and a week domestic economy, has provided some room to delay further tightening of monetary policy stance - for now. Accordingly, the MPC has decided to keep the repurchase rate at seven percent per annum."

The bank took the same decision at the May meeting of its Monetary Policy Committee (MPC).

This follows two rate hikes so far this year.

In March, the bank increased the repo rate, which is the rate at which the Sarb lends money to banks, by 25 basis points to seven percent.

In January the bank hiked the repo rate by 50 basis points to 6.75 percent.

Kganyago added the central bank also revised South Africa's growth forecast from 2016 down to zero percent from 0,6 percent. This is lower than the International Monetary Fund's growth forecast of 0,1 percent.