Reserve Bank's close call on interest rate

Reserve Bank's close call on interest rate”

The announcement came as a relief for consumers after the bank left the repo rate unchanged at seven percent per annum in May, the seventh time in a row since May 2016.

Below are comments from South African Reserve Bank Governor Lesetja Kganyago on Thursday as he announced the central bank's latest decision on its benchmark repo rate.

Analysts said the Bank would be hard pressed to reduce rates further as the political tensions mentioned by the Bank in the MPC statement were not expected to abate as the year progresses.

"We expect that there could be a higher chance of the cut in November but that will depend on movement of the rand".

This could push out the next rate cut into 2018, he said.

South Africa's rand and bonds were firmer early on Friday, extending gains after the central bank surprised markets by leaving benchmark rates unchanged.

The rand was supported by inflows into the bond market.

At 9.53am‚ the rand was at R13.2035 to the dollar from R13.2809‚ at R15.8415 to the euro from R15.8571 and at R17.9472 to the pound from R18.0410.The euro was at $1.1998 from $1.1941.

The euro was at $1.1986 from $1.1941.

Governor Lesetja Kganyago admitted the decision was tight, with the six-member monetary policy committee split 3-3 on whether to hold or cut, leading to the maintenance of the status quo.

The main risks for the currency came from either the tightening of central bank policies which appears to be now underway or from the threat of a credit rating downgrade.

Political risks include that the ANC is heading to its elective conference in December to choose a new leader to replace President Jacob Zuma.

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