RESERVE BANK
Why economists expect a steady repo rate for 2018
‘The Bank will play it on the safe side given the risks’
Never mind Thursday’s interest-rates decision, economists say the South African Reserve Bank will not be cutting the repo rate again in 2018. That is because the inflation rate is edging up after surprising on the downside in recent months. In the first set of data that reflected the value-added tax (VAT) increase announced earlier in 2018, Statistics SA said on Wednesday the annual headline inflation rate had increased to 4.5% in April, up from a seven-year low of 3.8% in March. Since the last monetary policy committee (MPC) meeting — when the Bank cut the main rate by 25 basis points and governor Lesetja Kganyago said the rand was overvalued — the currency has slid about 5% against the dollar. Oil prices have also jumped, putting upward pressure on prices of imported goods. "The Reserve Bank will flag heightened near-term pressure that didn’t exist at the last MPC," said economist Thabi Leoka. "It makes sense to pause," she said. The rand lost further ground against the dollar on ...
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