Property sector criticises modest interest rate cut

THE South African Reserve Bank's (SARB) latest interest rate decision has come under fire from property sector leaders, who argue that the 25 basis point cut announced last week falls short of providing the stimulus the struggling economy needs.

- SIPHESIHLE BUTHELEZI

SARB governor Lesetja Kganyago confirmed that the Monetary Policy Committee (MPC) had decided to reduce the repo rate to 7.25%, citing a benign inflation outlook and subdued economic growth projections.

Despite inflation sitting at just 2.8%, below the SARB's 3-6% target range, the central bank opted for a modest reduction. Kganyago indicated that while the inflation forecast has been revised down due to favourable oil prices, a stronger exchange rate, and the cancellation of VAT increases, the MPC considered "an adverse scenario" involving currency weakness and global trade tensions, which could lead to stagflation.

But the property sector is not convinced by SARB's cautious approach.

"The SARB has consistently preached that their policy bible contains only one chapter, titled 'inflation targeting,'" said Renier Kriek, managing director of Sentinel Homes. "Their messaging has consistently and unfailingly pledged that their mandate is the only consideration that guides their decisions."