South African Reserve Bank Governor Lesetja Kganyago announced yesterday that the repo rate would remain unchanged at seven percent, but he warned that the Monetary Policy Committee (MPC) would not hesitate to change its position.
Kganyago says a weak rand combined with high oil prices is not good news for consumers.
“Domestic petrol prices have increased by accumulative R1 per litre since March.”
He adds low household expenditure is one indication that growth remains low.
“Household consumption expenditure also remains subdued with low growth in retail sales in the first quarter.”
Standard Bank chief economist Goolam Ballim says there also other pressures facing the economy.
“There’s pressure especially from food, oil and the potential from a weaker rand is weighing on the prospects for near-term inflationary spikes.”
Investment Solutions’ Lesiba Mothatha says political instability is also a major problem.
“Seemingly, political situations are becoming a problem in terms of how the Department of Finance is looked at."
Independent economist Thabi Leoka says the slow growth rate was taken into account when deciding to keep the repo rate unchanged.
