Surprise deficit dip stirs rate-cut hopes
Bank may remain cautious due to political and global risks to the rand and inflation outlook
SA’s current-account deficit has fallen unexpectedly steeply, supporting a stronger rand and adding to hopes in the market that the Reserve Bank might start cutting interest rates later in 2017. But economists are divided, with many expecting that the Bank, whose monetary policy committee meets next week, will remain cautious in the light of political and global risks to the rand and the inflation outlook. They will be updating forecasts following the release on Wednesday of the Bank’s Quarterly Bulletin and of Statistics SA’s consumer price index inflation figures, which showed inflation declining to 6.3% in February, in line with market expectations, from 6.6% in January, with food inflation falling to just less than 10%. Absa Capital economist Peter Worthington said that although inflation would fall to within the Bank’s 3%-6% target range in the second quarter, it would remain very close to the top of the range. "The market can get quite excited about the idea of rate cuts as it...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.