INTEREST RATE OUTLOOK
Uncertainty will keep doves quiet
Low-growth environment raises questions about an interest rate cut to stimulate consumer and business spending
South African consumers and companies started 2017 on a positive note. The political situation was stable, the rand was much stronger than it had been 12 months before and there were forecasts for improved economic growth. The optimism was short-lived. In the space of a week in March, Pravin Gordhan — viewed as a safe pair of hands by business and foreign investors — was fired as finance minister and the country’s sovereign credit rating was promptly downgraded. Economic growth forecasts were downgraded soon after, while concerns mounted that President Jacob Zuma’s extensive cabinet reshuffle would threaten SA’s fiscal and institutional framework. "Corporate credit growth is running ahead of inflation, but overall credit growth remains negative in real terms." Figures from the National Credit Regulator for the quarter to December 2016 indicate weak growth in credit applications among consumers. Credit applications increased 4.4% to 10.52-million over the period, which is seasonally ...
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