ECONOMIC OUTLOOK
Future rate cuts will be modest due to inflation risks, says Bank
Reserve Bank deputy head Kuben Naidoo believes South Africans are ‘unusually susceptible’ to Ponzi schemes
SA can expect only modest cuts in the repo rate, Reserve Bank deputy governor Kuben Naidoo says. Speaking at the Alexander Forbes Umbrella Fund conference in Pretoria on Monday, Naidoo said he expected it would be a shallow cutting cycle. This is in spite of an imploding economy in which GDP growth has fallen from 1.5% in 2015 to 0.3% in 2016 and into negative territory for the first two quarters of this year. Naidoo said SA was getting poorer in per capita terms even before that. He said a recovery looked unlikely so long as there continued to be mistrust between the public and private sectors. Much of the private sector was holding back on local investment as policy uncertainty continued, and the JSE was dominated by rand hedges such as Naspers, British American Tobacco and AB Inbev. He said many companies found the African continent to be more attractive than home. As recently as in 2014, SA invested more in the rest of Africa than China did. The Reserve Bank could not afford to ...
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