The South African Reserve Bank (SARB), the central bank of South Africa, announced that it was keeping the interest rates unchanged at a Monetary Policy Committee meeting in Johannesburg on Thursday.
As predicted by a number of economists interviewed by scores of publications, the Governor of the SARB, sixty-five year old Gill Marcus confirmed that the interest rates would remain unchanged at 5.75%. This, the central bank argued, was because the outlook for economic growth had become worse in the period under review. In addition, they added, inflation had increased drastically until it reached a peak of 6.6% in May. In addition, the bank announced that it was cutting their previous growth forecast for the economy, attributing this anticipated decline, in part, to platinum production, which they said would continue to perform below its potential until the end of the year due to the lingering effects of the five-month wage related strike.
In addition, the strike action had resulted in a recession in the mining sector which had, in the first quarter, almost dragged the economy into a recession. For consumers, the decision to retain the interest rates as they were will provide relief to consumers who were getting worried about debts, expensive loans as well as bleak job prospects. Furthermore, Gill Marcus added that rising consumer prices as well as a continuously weakening rand would also eat away at the consumer’s disposable income. She sounded a word of caution, saying that while the bank was in a hiking cycle, it would be very presumptuous and dangerous to the economy as any moves would need to depend heavily on available data.
Gill Marcus took the opportunity to announce that she was stepping down as the leader of the South African Reserve Bank. She announced that she had advised President Zuma about her pending exit, which she said would be at the end of her term in November. The anti-apartheid-activist-turned banker has been at the helm of the bank at the most difficult time in the history of the country. Her tenure was mainly characterized by strikes, low growth and rising inflation. She has however, managed to remain level headed and has been pointedly very critical of both labour and business for the current reduced productivity. She is known to have turned down several pay rises as she emphasizes her commitment to reducing the gap between the haves and the have nots. Her stepping down was such a shocker that the rand plummeted to its all time low of 11.1095 percentage points, a decrease of just over 0.5 percentage points, its lowest since February.