Repo rate cut back on the cards

South Africa’s economic growth will be softer this year after the country slipped into recession in the first quarter and with inflation easing, an interest rate cut is back on the agenda.

Africa’s most industrialised nation is expected to expand 0.7% in 2017, 0.2 percentage points slower than last month’s median, as economists trimmed growth forecasts following SA’s first recession in eight years.

The median prediction for interest rates shows a cut is back in the forecast horizon – 25 basis points to 6.75% in January or March. Some economists have pencilled it in as early as July or September this year.

Mandla Maleka, chief economist at Eskom Treasury, said the cut could come earlier than 2018.

After contracting 0.7% in the first quarter, the economy is expected to have rebounded and will expand 0.8% this quarter and 0.9% in the third. – Reuters