ECONOMIC WEEK AHEAD: No changes expected from Reserve Bank and S&P
Despite weak economic growth and low inflation, an interest rate cut and a rating downgrade are not likely
Despite weak economic growth and low inflation in recent months, an interest rate cut this week is not likely — and neither is a downgrade from S&P Global Ratings. The Reserve Bank’s monetary policy committee is expected to keep the repo rate unchanged on Thursday as globally monetary policy takes on a dovish tone, allowing for looser monetary conditions. “The neutral tone in US monetary policy [is] indicative of stable US interest rates for the majority of this year and so likely for SA as well,” Investec chief economist Annabel Bishop said. The combination of lower economic growth and inflation that is comfortably within the Bank’s 3%-6% target band will not be enough to spark an interest rate cut, given the Bank’s stated desire to see inflation expectations anchored closer to the 4.5% mid-point of the target band. “Though the SA economy remains extremely weak, which argues for a possible interest rate cut, the current upward drift in SA inflation supports the view that the Re...
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