Sarb moves with caution, no rate cut predicted in January

AS JANU-WORRY comes to an end, consumers will not be given any reprieve in the form of an interest rate cut this month.

- ASHLEY LECHMAN

CONSUMERS can expect no reprieve from interest rate cuts this January, as the South African Reserve Bank (Sarb) maintains a cautious approach amid fluctuating inflation rates and economic uncertainty.

(I SARB Facebook)

The South African Reserve Bank (Sarb) Monetary Policy Committee (MPC) will be announcing their first decision on the repurchase rate (repo rate) this Thursday.

Economists and analysts have predicted that the central bank will be moving with caution and keep the rate unchanged at 6.75%, translating to the prime lending rate also staying the same at 10.50%.

Investec's lead economist, Annabel Bishop, said that the MPC meeting is not expected to see a change in interest rates, coming so soon after November's -25 basis points cut.

"With the repo rate currently at 6.75%, 325bp above the inflation rate, and with CPI inflation expected to fall below 3.0% y/y in Q2.26, the high real interest rate in South Africa supports further interest rate cuts. Indeed, without an additional -SObp cut this year (expected to be spread over two meetings), the real interest rate will rise further, nearing 4.00% midyear," Bishop said.