(Updates with economist’s comment in third paragraph.)
Sept. 29 (Bloomberg) -- South African credit growth accelerated to 6.1 percent in August as the central bank kept its key lending rate at a 30-year low for the longest period since 2006 to support economic growth.
Expansion in lending to households and businesses increased from 5.7 percent in July, the Pretoria-based Reserve Bank said on its website today. The median estimate in a Bloomberg survey of 12 analysts was 5.5 percent.
“It’s a little bit higher,” said Colen Garrow, an economist at Brait SA in Johannesburg. “But, I am afraid the story is still a weak one. My argument is still very much in favor of cutting interest rates.”
Consumer confidence has weakened as the economy’s recovery faltered in the second quarter, expanding at the slowest pace in two years, undermining spending and credit demand. The consumer sentiment index dropped to a two-year low of 4 in the third quarter, First National Bank said on Sept. 12. Growth in household spending slowed to an annualized 1.3 percent in the second quarter from 7.9 percent in the previous three months, the central bank said on Sept. 13.
Governor Gill Marcus kept the repurchase rate at 5.5 percent last week and said the Monetary Policy Committee was “ready to act” if the economic crisis in the U.S. and Europe threatens to derail growth in the largest economy in Africa.
The rand weakened 0.6 percent to 7.8547 per U.S. dollar at 8:18 a.m., pushing the decline this year to 16 percent. The currency is the worst performing among the 16 major currencies tracked by Bloomberg this year.
The broad M3 measure of money supply rose 6.2 percent in August from a year earlier, the central bank said. The median estimate in a Bloomberg survey was for M3 to expand 5.6 percent.
“If you look at the underlying trend, it’s one of things getting better,” said Razia Khan, head of Africa economic research at Standard Chartered Plc in London, before the data was released. “The big question mark everyone has right now is what is happening to consumer demand.”
--Editors: Nasreen Seria, Gordon Bell, Vernon Wessels
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