Reserve Bank disappoints, after SA held its breath for a rate cut
Governor Lesetja Kganyago cited heightened economic uncertainties and a potential 20% electricity price hike as reasons for the shock decision
The Reserve Bank delivered disappointing news on Thursday, when it kept interest rates on hold, defying expectations for a cut of 25 basis points. Bank governor Lesetja Kganyago cited heightened uncertainties in the economy, and upside risks to inflation from a potential 20% electricity tariff hike that Eskom is seeking, and the knock-on effects of that. Looming US interest rate hikes, which would put pressure on the rand, were also a concern. With anaemic growth and slowing inflation, 18 of 26 economists polled by Reuters had expected a 25-basis-points cut, and the other eight thought there would be no move. The Bank cut the repo rate for the first time in five years in July, to 6.75% from 7%. Bonds were slightly weaker on Thursday afternoon, but the rand strengthened to R13.29/$ from R13.40/$ before the announcement. Announcing the monetary policy committee’s (MPC’s) decision, Kganyago said on Thursday: “The inflation forecast has increased marginally since the previous meeting of...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.