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Mail & Guardian reports that economists are expecting the SA Reserve Bank (SARB) to cut interest rates by 25 basis points when it concludes its monetary policy meeting this week.
This would bring the repo rate down to 7.50% and the prime rate to 11%. It would be the third consecutive cut, after the SARB reduced rates by a cumulative 50 basis points in the last two meetings in 2024. After December’s consumer inflation rate ticked up to 3% – still lower than economists’ expectations – the SARB has a good case for cutting interest rates by 25 basis points this week, said Zandile Makhoba, consumer economist at Liberty. She added that the average for 2024’s inflation rate was at 2.8%, which was also lower than expectations of it reaching from 3% to 6%. “These factors are encouraging for the monetary policy committee to create some stimulus in the economy, by giving us a rate cut,” she said. The outlook for the year is also more positive, giving the SARB more room to cut interest rates this year. “The Reserve Bank forecasted inflation to remain around the 4% mark, and that’s in line with the consensus of most economists,” Makhoba pointed out. Investec economist Lara Hodes is also expecting the Reserve Bank to cut rates by 25 basis points.
- Read the full original of the report in the above regard by Aarti Bhana at Mail & Guardian
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