CAPE TOWN: South Africa’s inflation fell below the upper end of the central bank’s target band in August for the first time this year, leaving room for policymakers to continue to pause their tightening cycle. The rate fell to 5.9 percent from 6 percent a month earlier, Statistics South Africa said in a report released Wednesday in the capital, Pretoria. That was in line with the median of 24 economist estimates compiled by Bloomberg. Prices fell 0.1 percent in the month.
The South African Reserve Bank has raised its benchmark repurchase rate by 200 basis points to 7 percent since January 2014 in a bid to limit price growth to within its 3 percent to 6 percent target band. It left borrowing costs unchanged at its past two meetings to help support an economy forecast to expand at the slowest pace this year since a 2009 recession. Mining output declined in July and growth in factory output and retail sales slumped, the statistics office said this month.
“This number just gives them that room to temporarily leave rates unchanged, especially when you see what is happening with growth,” Busisiwe Radebe, an economist at Nedbank Group Ltd. in Johannesburg, said by phone on Wednesday. “The SARB, for now, will take a wait-and-see approach to see what will happen with the rand.”
