Cape Town - Heavily-indebted consumers - already squeezed by rising fuel and food prices - are likely to be breathing a little easier after the South African Reserve Bank on Thursday decided to keep interest rates steady.
The bank's Monetary Policy Committee (MPC) ended its two-day meeting on Thursday by announcing it would keep the rate at which it lends to banks steady at 12.0 percent.
In his announcement broadcast live on SABC, Reserve Bank governor Tito Mboweni said there were a number of reasons for the decision to keep rates unchanged.
Among these were:
Inflation was expected to peak around 13 percent later this year and would then ease to within the bank's 3-6 percent target range by the second quarter of 2010.
Oil prices has also dropped by around $30 per barrel and the rand had appreciated by 4 percent since the MPC's last meeting.
The local housing market was subdued and house prices were falling.
The decision to keep rates on an even keel met with the expectations of economists, who felt that a recent slew of data showed that the bank's series of rate hikes were now beginning to have unwanted effects.
Retail data published this week showed that sales fell for the fourth consecutive month as consumers continue to feel the effects of monetary policy on their disposable income.
Analysts said the figures were part of a growing pile of evidence that economic growth is stalling. Added to this was an improved outlook for inflation, which made a good case for the Reserve Bank to keep the repo rate steady.
An I-Net Bridge survey of 13 top economists by showed a consensus for the repo rate to remain unchanged at 12 percent.
Ten of the economists surveyed expected no change in rates, while three said the bank would hammer home another 50 basis points increase. Most agreed that if rates were hiked, the move would mark the end of the bank's tightening cycle.
The bank began tightening monetary policy in June 2006 and has since raises rates by 400 basis points through several hikes.