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There were no surprises at the conclusion of the Monetary Policy committee (MPC) meeting on Thursday as the South African Reserve Bank (SARB) policymakers voted unanimously to keep lending rates unchanged. The repo rate remains at 6.5% and the prime lending rate at 10%.
The SARB has kept its forecast for Headline CPI inflation at 4.9% for 2018 and 5.2% in 2019. The bank has said that it believes that we have now seen the lows of the inflation cycle. Lower food price inflation is expected to help offset the inflation driven by a weakening rand and higher oil prices. The rand at current levels is also believed by the central bank to be more or less at fair value.
The central banks expectation for Gross Domestic Product (GDP) growth remains at 1.7% for 2018 and has been revised slightly higher to 1.7% for 2019. The first quarter of 2018 is however expected to show negative growth as a result of contraction within the mining and manufacturing sectors.