IMF says central bank should consider keeping rates steady

folarin okunola

July 9, 2016 7:30 AM

"As the impact of past policy hikes is still filtering through, and the weak economy should keep inflation contained," the IMF said in statement

The International Monetary Fund (IMF) logo is seen at the IMF headquarters building during the 2013 Spring Meeting of the International Monetary Fund and World Bank in Washington, April 18, 2013. REUTERS/Yuri Gripas

South Africa's central bank should consider holding interest rates steady unless inflation expectations rise substantially, the International Monetary Fund said on Thursday as it cut its 2016 growth forecast for Africa's most industrialised economy.

"As the impact of past policy hikes is still filtering through, and the weak economy should keep inflation contained," the IMF said in statement released after Article IV discussions with South Africa.

The central bank, which faces a policy dilemma of rising prices and slow growth, has hiked rates by 200 basis points in total since January 2014 to try to get inflation down into its target band of 3 to 6 percent.

In a news column in the Business Day newspaper, the IMF said South Africa's economy would grow by 0.1 percent in 2016 versus a previous estimate of 0.6 percent given by the global lender in May.

folarin okunola