S.African repo rate held steady at 5 percent

PRETORIA (Reuters) - South Africa's Reserve Bank left its repo rate unchanged as expected at 5 percent on Thursday, citing concerns about the inflationary impact of a lower rand exchange rate against a weakening economic growth outlook.

All but one of 25 economists polled by Reuters last week expected the Bank to keep rates on hold, and the majority forecast steady rates throughout 2013.

The rand gained after Governor Gill Marcus said it was "premature" for the market to start pricing in a rate cut even though she said the Monetary Policy Committee (MPC) had discussed extensively about loosening policy.

The currency firmed 0.4 percent to 9.5375 to the dollar.

The rand had earlier fallen to a four-year low against the dollar. Thursday's bounce after the MPC put it on course to break a 10-day losing streak.

Marcus reiterated that even at such weak levels, the Bank would not intervene in foreign exchange markets and instead said the weakness could be used to South Africa's advantage.

"At these levels there is a question of using a depreciated currency to improve competitiveness and make sure that if there's a depreciation it is maintained and not eroded by either wage demands or price hikes," she said.

The bank's inflation forecast improved, with inflation now expected to breach the 3-6 percent target band less agressively than previously forecast, in part because of lower global inflation.

However the bank also cut its 2013 growth projection to 2.4 percent from 2.7 percent previously.

Source: http://news.yahoo.com/africas-central-bank-leaves-repo-rate-steady-5-132901936.html

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