(Updates with analysts’ comments starting in third paragraph.)
June 30 (Bloomberg) -- South African credit growth unexpectedly slowed in May, reducing pressure on the central bank to raise interest rates from a 30-year low.
Borrowing by households and businesses rose an annual 5.2 percent, down from 6.2 percent in April, the Pretoria-based Reserve Bank said on its website today. The median estimate of 15 economists surveyed by Bloomberg was 6.3 percent.
The Reserve Bank cut its benchmark interest rate three times last year to a 30-year low of 5.5 percent to help spur consumer spending, which accounts for two-thirds of demand in the economy. Credit growth was expected to accelerate after the economy expanded 4.8 percent in the first quarter, the fastest pace in a year.
“The still-modest growth in credit demand suggests that although spending and production are rising, there is little demand pressure on prices as both households and businesses remain cautious,” Nedbank Group Ltd., South Africa’s fourth- largest bank, said in e-mailed comments. The central bank is likely to delay interest rate increases until early 2012, it said.
The rand traded at 6.7641 per dollar as of 9:47 a.m. in Johannesburg, up from 6.7918 before the release of the data.
Household credit rose an annual 6.9 percent, while corporate credit increased 3.7 percent, the central bank said.
“It is clear that the rate of expansion in private sector credit remains relatively muted and has lagged the overall economic recovery,” Kevin Lings, an economist with Stanlib Asset Management in Johannesburg, said in e-mailed comments. “We still expect credit growth, especially consumer credit, to move modestly higher during the next 12 months”
The broad M3 measure of money supply increased an annual 6.1 percent in May, up from 6 percent in April. The median estimate of 12 economists surveyed by Bloomberg was for M3 to expand 5.8 percent.
--Editors: Gordon Bell, Philip Sanders, Heather Langan
To contact the reporter on this story: Mike Cohen in London at email@example.com
To contact the editor responsible for this story: Andrew J. Barden at firstname.lastname@example.org