2019.11.2113:34:00UTC+00S. Africa Central Bank Holds Rate Steady Again

South Africa's central bank left its key interest rate unchanged for a second consecutive policy session on Thursday, citing downside risks to the growth forecast and balanced risks to the inflation outlook.

The Monetary Policy Committee of the South African Reserve Bank, led by Governor Lesetja Kganyago, decided keep the rate unchanged at 6.5 percent, in line with economists' expectations. Three members voted to keep rates unchanged, while two sought a 25 basis points reduction. The previous change in the rate was a quarter-point cut in July.

The MPC assessed the risks to the growth forecast to be to the downside, the bank said.

"The overall risks to the inflation outlook are assessed to be balanced, but uncertainty about inflation risks is unusually high," the SARB added.

The central bank cut the growth forecast for this year to 0.5 percent from 0.6 percent and the projection for next year was lowered to 1.4 percent from 1.5 percent. The outlook for 2021 was slashed to 1.7 percent from 1.8 percent.

The average inflation projection for this year was retained at 4.2 percent and the forecast for next year was kept at 5.1 percent. The outlook for 2021 was also maintained at 4.7 percent.

However, the forecast for core inflation for this year was lowered to 4.2 percent from 4.3 percent and the projection for next year was cut to 4.5 percent from 4.7 percent. The rate for 2021 was retained at 4.6 percent.

The SARB retained its forward guidance of a 25 basis points repo rate cut in the third quarter of 2020.