South Africa to maintain rate pause as inflation holds steady
South Africa’s inflation rate flatlined in May, increasing the likelihood that the central bank will keep borrowing costs on hold.
Consumer prices rose an annual 5.2% last month, the same as in April, Pretoria-based Statistics South Africa said Wednesday in a statement on its website. That matched the median of 14 economists’ estimates in a Bloomberg survey.
The reading will probably persuade the six-member monetary policy committee, which meets mid-July, to keep the benchmark rate at a 15-year high of 8.25% for a seventh straight meeting.
Governor Lesetja Kganyago has consistently expressed concern that the inflation rate isn’t receding as much as the MPC would like and that borrowing costs will only be lowered when it is firmly at the midpoint of the 3% to 6% target range.
Forward-rate agreements used to speculate on borrowing costs show traders are now pricing in a 36% chance of a 25-basis point cut in July, compared with 20% before the data was released.
