Economists expect SARB to leave interest rates unchanged

The South African Reserve Bank has left interest rates unchanged at 7% since March this year.

FILE: South African Reserve Bank Governor Lesetja Kganyago. Picture: GovermentZA

JOHANNESBURG - Economists say that despite the latest increase in consumer inflation, they still expect the South African Reserve Bank to leave interest rates on hold at their meeting on Thursday.

Stats SA announced earlier on Wednesday that consumer inflation increased to 6.4% in October, a figure slightly higher than what analysts had expected.

Consumer inflation quickened to an eight month high in October with food prices again the largest contributor, up 11.7%.

The rise came on the back of South Africa’s worst drought in more than a century.

Nedbank Corporate and Investment Bank economist Mohammed Nalla says the recent rains could ease the pressure in the coming months.

“Hopefully the kind of rains that we’ve been getting recently will lead to a massive alleviation in terms of food prices inflation.”

ETM Analytics economist Jana van Deventer agrees: “Our in-house expectations are for the CPI pressures to start to abate into the next year.”

She expects that rates will remain unchanged into next year.

The central bank has left rates unchanged at 7% since March this year.

(Edited by Zamangwane Shange)