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South Africa: Risks inhibit cut as SARB leaves rates unchanged – FNB

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Following the South African Reserve Bank’s decision earlier today to keep interest rates unchanged, FNB confirms that it will maintain its prime lending rate at 10,25% and will review its position after the next SARB MPC meeting in March.

FNB CEO Jacques Celliers says, “After a positive but sluggish performance by the SA economy in 2017, we start the new year with the possibility of a sustained recovery from current levels. However, we should not underestimate the work required to rebuild our economy after years of low growth. Uplifting ourselves from this position will require a sustained effort across the public and private sectors.”

“January is an ideal time for consumers to take concrete steps towards greater financial security in 2018. A good starting point is to make a firm commitment to savings and investments to achieve goals such as buying a house or saving for retirement,” says Mr Celliers.

Mr Celliers continued to urge consumers to act with care and to ensure their budgets are able to accommodate possible increases in taxes and electricity.

Mamello Matikinca, FNB Chief Economist says, “In line with our expectations, the SARB MPC opted to keep the repo rate unchanged at 6.75% at its January 18th meeting. Despite inflation being well contained and a meaningfully stronger currency, the Reserve Bank remains concerned about the risks to the inflation outlook. These risks stem from a rising oil price, the National Budget in February and the possibility of a Moody’s downgrade in March. Such a downgrade would precipitate capital outflows and a weakening currency; we believe the SARB will wait until event risk subsides before pronouncing on any rate moves. Should event risk dissipate, we see scope for a rate cut this year.”

Credit: CNBC Africa

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