Independent Economist Elize Kruger say the Reserve Bank is likely to keep interest rates unchanged when it announces its rate decision this afternoon.The bank has increased rates by 475 basis points since November 2021 on the back of runaway inflation which had plagued the economy since the lifting of the COVID-19 induced lockdown.
Kruger says the Reserve Bank is likely to start cutting interest rates in the third quarter of the year. “My view in interest rates at this monetary policy committee meeting is that the committee will most likely decide to keep rates unchanged again at current levels. However, I do believe that the scenario is building for a cut in interest rates especially now that we’ve had election results, we had Rand strengthen by about 3% post the election and looking forward, inflation is expected to moderate further.
Kruger adds: “The Reserve Bank’s own forecast suggest an average headline CPI number of 4.7% in Q4 and average in 2025 of 4%. A forward lookiing view is that the Reserve Bank should now see an opportunity to cutting rates. However, concensus is that it will not happen at this meeting, but most propably a cut will be at the September MPC meeting.