Good news for consumers is that the South African Reserve Bank’s (SARB) monetary policy committee (MPC) Thursday kept the repo rate unchanged at 6.75 percent.
But the MPC revised down the country’s GDP growth, saying it was now expected to average 1.0 percent down from 1.3 percent forecast in March.
The announcement was made by the central bank’s governor Lesetja Kganyago in Pretoria.
Kganyago said three members preferred to keep rates on hold and two members preferred a cut of 25 basis points.
The central bank last raised the repo rate by 25 basis points in November to stem pressure.
Kganyago said headline inflation was expected to average 4.5 percent in 2019, down from 4.8 percent, increasing to 5.1 percent in 2020 and moderating to 4.6 percent in 2021.
He said the main drivers of the forecast are a lower starting point for food and services inflation, and the revised oil price assumptions.
Food price inflation is now expected to average 3.7 percent in 2019, down from 4.1 percent.
“The near term growth outlook is limited by the larger than expected slowdown in the first quarter, weak business and consumer confidence as well as growing pressure on household disposable income,” Kganyago said.
Kganyago also said weak business confidence, possible electricity supply constraints and high debt levels in certain state-owned enterprises will limit investment.