Reserve Bank paints bleak picture of SA's growth prospects
The Bank warns it will not hesitate to reverse its rate-cut decision if SA’s highly uncertain economic environment persists
A much-improved inflation outlook prompted the Reserve Bank to cut interest rates for the first time in five years on Thursday, but it painted a bleak picture of growth prospects, saying the cut would help only "at the margins". The Bank also warned that the environment was highly uncertain and it would not hesitate to reverse its rate-cut decision should the inflation outlook deteriorate again. The 25-basis-point cut surprised the market because few had expected the Bank to cut so soon. Many economists had argued that lower inflation over the next couple of years created the space for cuts in 2017 or early in 2018. Many had expected the Bank to be cautious in the face of political risks to the rand that could derail inflation. Also, the Bank had been expected to be wary of being seen to cave into political pressure to prioritise growth over inflation, after the public protector’s controversial recommendation to eliminate its price stability mandate. However, Bank governor Lesetja K...
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