The Citizen (KZN)

Reserve Bank to hold repo rate at 8.25% – poll


The South African Reserve Bank (Sarb) will keep its repo rate steady at 8.25% on Wednesday, all 23 economists unanimousl­y forecast in a Reuters poll, and wait until the third quarter (Q3) to start cutting.

A slight majority predicted no change in May versus a 25-basis points cut (bps), the poll also found.

Last month’s survey predicted the same after economists shifted from a May cut to Q3 in January.

Seven of 17 respondent­s expected a 50bps reduction by the end of Q3 meetings in July and

September, while five predicted a 75bps cut. Four suggested a 25bps trim and one expected no change.

The Sarb kept its key lending rate steady in January, as expected, saying it did not yet see a clear disinflati­on trend that would justify cutting. The repo rate has been unchanged since last May.

“Weakness in the rand exchange rate and a delay in the internatio­nal interest rate cycle could be possible factors to result in a cut later than expected,” wrote independen­t economist Elize Kruger.

Fed chair Jerome Powell said last week recent high inflation readings had not changed the underlying “story” of slowly easing price pressures in the US, as the central bank stayed on track for three interest rate cuts this year and affirmed solid economic growth would continue.

South Africa’s repo rate is expected to fall to 7.5% in November, loosely translatin­g to three consecutiv­e cuts in meetings from July to year end.

The bank aims to keep inflation within its three to six percent target. It is expected to slow and average 5.1% this year and 4.6% next year, a 0.1 percentage point nudge up from last month’s forecast for this year.

SA’s consumer inflation ticked up to 5.6% in February, moving closer to the central bank’s upper target, which economists say could mean a longer wait for rate cuts.–

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