The SA Reserve Bank , which cut its repo rate by 25 basis points in July to 6.5%, has plenty of room to bring rates lower. Inflation in July slowed to a seven-month low of 4% from 4.5% in June. The economy has dodged a recession, but the growth outlook remains poor, to say the least. And confidence has been absolutely shattered: the Rand Merchant Bank business confidence index plunged to a two-decade low in the third quarter.
Still, the consensus among economists is that the SARB will not pull the trigger when the Monetary Policy Committee wraps up its meeting on Thursday 19 September.We expect the SARB to keep the repo rate unchanged. While inflation expectations remain relatively well anchored, fiscal risks have increased rapidly in recent months, which warrants a cautious stance by the MPC.
So, forecast decreases could potentially become increases, and this new bout of oil price turbulence is bound to focus the minds of the MPC members as they deliberate policy. Still, inflation is hardly about to shoot for the stars. In a research note, NKC African Economics said it saw some inflationary pressure from an oil price spike, but the outlook remains moderate and pointedly well within the SARB’s 3-6% target zone.Our latest forecast for average headline CPI inflation for 2019 is 4.2%, and 5.0% in 2020. Assuming the oil price spike adds a R1/litre increase to the fuel price , the forecast for headline CPI inflation will tick higher to 4.3% in 2019 and 5.
Slow growth and poor economic policy is not the SARBS fault. If we want to change that we need those first to drive job growth
Being overly cautious has same impact of being overly reckless....& then selfish investors dump u anyway. Our economy dying and still in icu. Like crime in our beloved land only shock therapy will help jolt us out of it