ECONOMIC WEEK AHEAD: Immediate rate hike unlikely in recession
The August inflation numbers will be closely watched, writes Asha Speckman
Early indications are that economic activity remained weak heading into the third quarter of 2018 — a factor the Reserve Bank’s monetary policy committee will take into account as it weighs the feasibility of hiking interest rates this week. The third quarter saw a slow start as July’s mining output contracted 5.2% and the manufacturing and retail industries reported modest gains. Economists expect the Reserve Bank to cut its GDP growth forecast for this year from 1.2% to 0.6% or 0.7%. But the protracted emerging-market currency crisis, which caused the rand’s plunge to its weakest levels in two years, has raised inflationary expectations. Economists have revised their forecasts for the first interest rate hike in months to later this year, rather than early next year. Yet given tepid growth, Reserve Bank governor Lesetja Kganyago is expected to keep the repo rate on hold on Thursday.
Mamello Matikinca, FNB chief economist, said the Reserve Bank is likely to be "loath to hike ...
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