Johannesburg - Trade union Imatu on Thursday welcomed the SA Reserve Bank's decision to leave interest rates unchanged.
“While a rate cut would have been preferable, we are also pleased with the unchanged repo rate,” Independent Municipal and Allied Trade Union general secretary Johan Koen said in a statement.
South African Reserve Bank governor Gill Marcus. Photo: Leon Nicholas. Credit: Independent Newspapers
“This year our members are already facing steadily increasing prices in the food and transport sectors, without taking into account the electricity price hikes proposed by Eskom.”
The SARB left the repo rate unchanged at five percent, which kept the prime lending rate at 8.5 percent.
Razia Khan, regional head of research at Standard Chartered Bank, said the decision was largely expected.
“Our read on this remains Ä the SARB is unlikely to react to any temporary breach of the inflation target, especially one driven primarily by supply-side factors.
“But there is little doubt, with the emphasis on the wage-price spiral and the rand, that inflation risks are now thought of differently.”
SARB governor Gill Marcus said since the monetary policy committee's last meeting there had been some improvements in the global financial market.
However, economic prospects in a number of major advanced economies remained constrained.
On the domestic economy, Marcus said the committee was concerned about the high wage settlements and their potential impact on employment and inflation.
“There are indications that wage increases are trending higher, with growth in nominal remuneration per worker increasing from 7.2 percent in the second quarter of 2012 to 8.1 percent in the third quarter.”
Domestic economic growth remained fragile following an annualised growth rate of 1.2 percent in the third quarter of 2012, and an estimated growth rate of around 2.5 percent for the year.
“A similar outcome is expected in 2013 with growth of 2.6
percent forecast, revised down from 2.9 percent in the previous forecast,” she said.
“A more favourable outcome of 3.8 percent is forecast for 2014, compared with 3.6 percent previously, driven in part by a more favourable global outlook.”
The SARB expected inflation to average 5.8 percent in 2013 and 5.2 percent in 2014. - Sapa