Bloomberg News

South Africa Credit Growth Speeds Up as Bank Holds Key Rate

January 03, 2012

(Updates with comment from economist in fourth paragraph.)

Dec. 30 (Bloomberg) -- South African credit increased 6.22 percent last month, the most since April 2009, as the central bank kept its key lending rate at a 30-year low to support growth in Africa’s largest economy.

Borrowing by households and businesses accelerated from a 5.5 percent gain in October, the Pretoria-based Reserve Bank said on its website today. The median estimate in a Bloomberg survey of five economists was 5.9 percent.

The Reserve Bank has kept the benchmark rate at 5.5 percent this year to support consumer spending as Europe’s debt crisis sapped demand for exports. The economy grew an annualized 1.4 percent in the third quarter, little changed from an almost two- year low in the previous three months, the statistics office said on Nov. 29.

Credit extension is “still very modest,” and the increase is “roughly in line with inflation,” Dennis Dykes, chief economist at Nedbank Group Ltd., South Africa’s fourth largest bank, said by telephone from Johannesburg. “That won’t cause the Reserve Bank any particular concern.”

Nedbank now expects the central bank to raise its key rate by 0.5 percentage points in November and by the same margin in January 2013, Dykes said. The lender had previously forecast 0.5 percentage-point rate increases in June and September.

The rand traded at 8.1507 per dollar at 9:53 a.m. in Johannesburg, from 8.1772 before the release of the credit data and 8.1852 late yesterday.

The broad M3 measure of money supply rose 7.23 percent in November from a year earlier, down from 7.26 percent in October, the central bank said. The median estimate in a Bloomberg survey was for M3 to expand 7.45 percent.

--Editors: Hilton Shone, Eddie Buckle

To contact the reporter on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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