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Sarb says interest rates to be unchanged in short term

As it lowered its inflation outlook.

South Africa’s central bank will keep interest rates unchanged in the short term as it lowered its inflation outlook but will monitor European and U.S economic events closely, deputy governor Daniel Mminele said on Tuesday.

“The more benign projected inflation path… gives the Bank some room to pause in its interest rate normalisation process,” Mminele told an annual gathering at the South African Reserve Bank.

Mminele said the bank would keep an eye on a likely rebound in global crude prices and the effect this was likely to have on its long-term inflation.

“Although it is clear that policymakers globally have been given some reprieve as a result of the decline in oil prices, there still exists much uncertainty as to its drivers and its sustainability, which makes us vulnerable to a correction.”

Mminele also said the bank had made modest downward revisions to its core inflation forecasts for this year and 2016, to 5.5 percent and 5.1 percent respectively, at a November meeting.

The South African Reserve Bank, under new Governor Lesetja Kganyago, has kept benchmark interest rates unchanged at 5.75 percent as headline inflation has remained well below the bank’s upper limit of under 6 percent.

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