RATES CUT UNLIKELY
Fuel price and weaker rand to nix inflation reprieve
A weaker rand and rising fuel prices will ensure that any relief from the surprise slowdown in inflation in May will be short-lived. The April VAT increase will also push inflation higher in coming months, making it unlikely the Reserve Bank will be able to cut interest rates further in 2018. Deputy governor Kuben Naidoo this week suggested as much, warning that the Bank may have to raise rates if the rand’s 10% drop in 2018 leads to a generalised increase in prices. The Bank was likely to keep rates on hold "over the short to medium term, while trying to gauge the effect of global developments such as higher US rates, an escalation in the global trade war and increased nervousness about the economic fundamentals in many emerging economies", said Stanlib chief economist Kevin Lings.
The inflation rate was comfortably within the Bank’s 3%-6% range in May, dropping to 4.4%, from 4.5% in April, according to Statistics SA data released on Wednesday. It would probably drift towards...