‘No rate cut on cards’ despite easing inflation
The door is open but observers see change only later in year
The Reserve Bank is expected to keep interest rates unchanged when it announces its rates decision at its July monetary policy committee (MPC) meeting on Thursday. Governor Lesetja Kganyago will make the Bank’s rates announcement against a backdrop of easing inflation, which decreased marginally to 5.1% in June, according to Statistics SA data released on Wednesday. Economists are in agreement that the easing inflation may open the door for the Bank to cut interest rates, but this may be a reality only later in 2017. The Consumer Price Index (CPI), which measures changes in the price of goods and services purchased by households in urban areas, decreased 0.3 of a percentage point to 5.1% in June compared to 5.4% in May. This is the lowest level of inflation since November 2015. Momentum economist Sanisha Packirisamy said: "The MPC statement in May signalled an end to the rate-hiking cycle, while lower-than-expected growth … likely lowered the bar for interest rate cuts." Continuing ...
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