South Africa Holds Rate Steady After July Cut

South Africa's central bank left its key interest rate unchanged in September, as expected, after cutting it by a quarter-point in July.

The Monetary Policy Committee of the South African Reserve Bank unanimously decided keep the rate unchanged at 6.5 percent.

The bank left the growth forecast for this year unchanged at 0.6 percent, while cut the outlook for 2020 to 1.5 percent from 1.8 percent. The growth projection for 2021 was lowered to 1.8 percent from 2 percent.

"The MPC assesses the risks to the growth forecast to be balanced in the near term, but remains concerned about medium term growth and weak employment prospects," the bank said.

The average inflation projection for this year was cut to 4.2 percent from 4.4 percent, while the forecast for next year was kept at 5.1 percent. The outlook for 2021 was raised to 4.7 percent from 4.6 percent.

Risks to both the growth and inflation forecasts are balanced in the near term, the central bank said.

"The MPC welcomes the sustained moderation in inflation outcomes and the fall in inflation expectations of about one percent since 2016," SARB Governor Lesetja Kganyago said.

"The Committee would like to see inflation expectations also anchored closer to the mid-point of the inflation target range on a sustained basis."

The next policy session is scheduled for November 21.

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