South African Reserve Bank leaves policy rate unchanged at 6.75%

Below are the key headlines from the South African Reserve Bank's monetary policy statement, which got published after the bank decided to leave the policy rate unchanged at 6.75% as anticipated.

Upside risks to the inflation outlook have increased, mainly due to higher international oil prices and a weaker rand exchange rate. 

The domestic growth outlook remains weak, continuing its deviation from the generally more favourable global pattern.

The average forecast for inflation in 2017 is unchanged at 5.3%, but has been revised upward for 2018 and 2019 to 5.2% and 5.5%, from 5.1% and 5.4% previously.

The endogenously determined path of the repo rate in the QPM also provides an offsetting effect.

This path implies three interest rate increases of 25 basis points each by the end of 2019, compared with one increase previously.