South African reserve bank raises repo rate as inflation outlook worsens

PRETORIA (Reuters) - South Africa's Reserve Bank raised its benchmark repo rate by half a percentage point as expected on Thursday, saying the outlook for inflation had deteriorated significantly even as economic growth slowed. Nineteen of 31 economists polled by Reuters said the central bank would hike interest rates by 50 basis points, while 11 predicted a more moderate 25 basis point increment. Thursday's decision is the first time since July 2014 that the Bank has added 50 basis points rather than the 25 basis point additions it has made since then. "Previously, the committee expressed concerns about the growing risks to the inflation outlook, mainly due to exchange rate and food price risks," Governor Lesetja Kganyago told a news conference after the bank's Monetary Policy Committee held its first meeting of the year. "These risks appear to be materialising and have contributed to the significant deterioration of the inflation forecast." The rand fell about 25 percent against the dollar last year and has given up another 6 percent so far in 2016, weighed down by concerns over sluggish growth in African's most advanced economy, as well as a slowdown in China. (Reporting by Mfuneko Toyana and Tiisetso Motsoeneng; Writing by Stella Mapenzauswa; Editing by James Macharia)