Reserve Bank cuts interest rate as risks ‘subside’
Moody’s decision on SA's investment-grade rating influenced the call, but it may be last
The Reserve Bank cut interest rates for the second time in five years, saying the inflation outlook and inflation expectations had improved, and the risks had subsided, especially after Moody’s Investors Service affirmed SA’s investment-grade rating on Friday. But the decision was a close call, with three of the seven monetary policy committee members favouring no cut, and economists expect this could be the last of the cuts. “That’s it, everyone,” said Standard Chartered economist Razia Khan, who predicts there could even be a rate hike by the end of 2018, if the economic growth rate recovers quickly. NKC economists Elize Kruger and Gerrit van Rooyen said a window of opportunity had presented itself with the potential negative effect of a Moody’s downgrade having disappeared, inflation at a three-year low and real interest rates at a seven-year high, but they forecast no further cuts, with interest rates set to remain at the current level for a prolonged period. Bank governor Leset...
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