Economists call for rate cut to ease hardship
Recession means Reserve Bank policy is behind the curve, say bank analysts
Economists are calling for the South African Reserve Bank to consider easing interest rates, despite the risks, in the wake of gross domestic product (GDP) figures that show SA has moved into recession. The 0.7% contraction in the first quarter of 2017 showed consumers were taking strain, with household spending falling 2.3%. Cutting interests rates could help to alleviate the pressure on consumers. "Consumers are financially constrained, and an interest rate cut, even a 25 basis point easing, would be welcomed as many consumers are very vulnerable financially," Investec chief economist Annabel Bishop said on Wednesday. The Reserve Bank forecast 1% growth for 2017 at its monetary policy committee meeting in May. But the bank might revise down its forecast along with other economists. Investec is looking to revise down its GDP growth forecast to closer to 0.5% year on year, from 0.8% previously, for 2017. Old Mutual Investment Group slashed its annual growth forecast from just above ...
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