Cape Town – South African Reserve Bank governor Gill Marcus said on Thursday the decision to keep the key lending rates on hold at 5.5% was split.
“Five Monetary Policy Committee (MPC) members wanted to hold and two wanted a raise,” she said.
The decision was also split at its last MPC meeting in March when rates also remained unchanged.
At that time Marcus said four members decided to hold the rates, while three wanted a hike.
On Thursday, Marcus reiterated that the bank remained in a monetary tightening cycle.
“The MPC continues to face the difficult dilemma of dealing with upside risks to inflation and a deteriorating domestic economic growth outlook.”
Marcus also warned of bad quarter growth, adding that the Sarb further revised down the economic growth forecast for the year.
“The bank’s economic growth forecast for 2014 has been revised down significantly to 2.1%, and the first quarter growth outcome is anticipated to be the lowest quarterly growth rate since the recession in 2009.”
Turning to the protracted platinum mining strike, Marcus warned that it could have a further potentially devastating impact.
“The risks to the 2014 growth forecast are strongly on the downside, with developments in the mining sector an ongoing cause for concern”, she said.
Marcus said the MPC continues to hold the view that the country is in a rising interest rate cycle, however she said it “does not mean that rates will be raised at each meeting, or by the same amount each time”.