Interest rates to stay higher for longer
Hopes for an early start to the rate cutting cycle have been dashed by a cautious Reserve Bank, concerned about the stickiness of inflation, elevated inflation expectations and swirling risks
The message from last week’s monetary policy committee (MPC) meeting is that the Reserve Bank is in no rush to start cutting the repo rate. The first cut may now come later in the year (September rather than July), and the cutting cycle may be shallower than most had been hoping for.
The unanimous decision to keep the repo rate at 8.25% — for the fifth meeting in a row — was hardly a surprise given that CPI has trended higher since December and, at 5.6% for February, remains far above the Bank’s 4.5% target. Yet the economy remains stuck in low gear while business and consumer confidence remains depressed at very low levels...
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