After todays Reserve Bank monetary policy committee meeting, it was decided that the key repo rate would remain unchanged at 12% whilst the prime lending rate remains at 15.5% in South Africa. This following on from interest rates being slashed by most major central banks across the world inorder to inject some liquidity into the under pressure markets. South Africa, however, did not look set to follow suit as it does not suffer the same banking difficulties that the United States and Europe face and therefore didn’t need similar remedies, analysts told Reuters.

Reserve Bank governor, Tito Mboweni, was however not too sure how inflation in South Africa is going to pan out in the next couple of months. Mboweni forecast a moderate improvement in the inflation outlook and said it was expected to peak at an average 13.3 percent in the third quarter of this year but inflation hit the 13.6% mark in August this year. It may seem hard to see the rate of inflation coming back down to the target of 3-6% anytime soon but analysts are predicting this target to be reached in the second half of 2009.

For now its a matter of ‘play it as it is’. Interest rates could have gone up because of rising inflation or they could have gone done following the worldwide economic crisis but they remain as is.

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