By Kopano Gumbi and Alexander Winning
PRETORIA (Reuters) – South Africa’s central bank said on Thursday that inflation risks had eased somewhat, but it held its key rate for the sixth meeting in a row citing high inflation expectations.
The decision to keep the repo rate at 8.25% was unanimous and came a day after the country held a pivotal election.
Early results show the ruling African National Congress is on course to lose a majority it has held for 30 years, an uncertain prospect that caused the rand to weaken on Thursday and government bond prices to fall.
In its latest Monetary Policy Committee statement the South African Reserve Bank dropped a reference to inflation risks being to the upside, saying they were now balanced.
The bank also said it saw inflation stabilising at its 4.5% objective in the second quarter of next year, an improvement on March when it saw inflation reaching that milestone at the end of 2025.
“Although the MPC assesses the inflation forecast risks to be broadly balanced … high inflation expectations require that we deliver on our target sooner rather than later,” SARB Governor Lesetja Kganyago told a news conference.
Kganyago said the bank’s policy stance was working but that the job of bringing inflation to target was not yet done.
On BHP Group’s bid for rival miner Anglo American, the governor said the central bank had not received any application from the companies on the impact for capital flows since they had not reached a deal.
BHP wanted Anglo to divest its South African platinum and iron ore assets as part of its takeover bid, but it walked away from the transaction on Wednesday after being rebuffed.
“Given that the engagement is broken, there is no marriage so we can’t give you those numbers,” he said, referring to the amount of capital outflows that could have resulted if the two miners had struck an agreement and Anglo divested South African assets.
(Reporting by Kopano Gumbi and Alexander Winning; Additional reporting by Tannur Anders; Editing by Bate Felix and Alison Williams)
