* C.bank sees little room for further accommodative policy
* Inflation to return to within target by year-end
(Adds background, details)
JOHANNESBURG May 7 (Reuters) – South Africa’s Central Bank
Governor Gill Marcus said on Monday there was little room to cut
interest rates and that the bank had to be mindful of higher
inflation despite the rand’s volatility on foreign exchange
markets.
The bank has left interest rates unchanged at 5.5 percent
for 16 months after cutting them by 650 basis points over a
two-year loosening cycle that ended in November 2010.
In a speech at a business briefing in Zurich, Marcus said
the domestic inflation trend suggested there was little scope
for further accommodative monetary policy, if all other factors
remained the same.
“The expected inflation trajectory suggests that there is
limited, if any, room for further monetary accommodation at this
stage,” she said, adding that significant changes to factors
such as the domestic growth outlook and the global economy could
alter the situation.
The bank expects inflation, at 6 percent in March, to return
to within its 3-6 percent target range by the end of the year
“on a sustainable basis”.
The next policy rate decision is expected on May 24.
Continued…
