Credit: REUTERS/THOMAS WHITEAdds details, quotes from governor
PRETORIA, May 23 (Reuters) - South Africa's central bank kept its benchmark repo rate unchanged at 6.75 % on Thursday, saying while the medium term inflation forecast had moderated, economic growth was set to contract in the first quarter and continue to weaken.
"Recent monthly inflation outcomes have remained around the mid-point of the inflation target range, in part due to weak demand and positive inflation data surprises," Governor Lesetja Kganyago told reporters in Pretoria.
Of the five members of the Monetary Policy Committee (MPC), three voted in favour of no change while two voted for a 25 basis point decrease.
The rand ZAR=D3 stretched losses from earlier in the session after the largely expected decision, sliding to 14.5200 per dollar at 1320 GMT having earlier traded at 14.4200.
Some economists argue falling inflation is an effect of the weak economy and that the SARB should cut rates to stimulate demand, particularly in consumer spending which accounts for 60 percent of gross domestic product but has been depressed for most of the last 5 years.
"The committee assesses the stance of monetary policy to be broadly accommodative over the forecast period. Any future policy adjustments will continue to be data-dependent," Kganyago said.
The bank has now kept rates on hold for three consecutive meetings since upping them by 25 basis points in November.
The bank said it saw consumer price-growth averaging 4.5% in 2019, down from 4.8% it forecast in March. Inflation would rise to an average of 5.1% in 2020 before slowing to a 4.6% rate of growth in 2021, due mainly to lower food, oil and wage costs.
The regulator cut its economic growth outlook again, down to 1.0 % for 2019 from 1.3% seen in March. In January it saw GDP accelerating 1.5 %.
(Reporting by Olivia Kumwenda-Mtambo and Tanisha Heiberg, Editing by Angus MacSwan)
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