Reserve Bank governor Lesetja Kganyago. Picture: Moeletsi Mabe
Reserve Bank governor Lesetja Kganyago. Picture: Moeletsi Mabe

Reserve Bank governor Lesetja Kganyago is expected to announce no change to the central bank’s 6.75% repo rate at 3pm on Thursday.

By convention, South African commercial banks add 3.5 percentage points to the repo rate when quoting their benchmark prime rate for home, car, credit card and other interest rates. This means the prime rate is likely to remain level at 10.25%.

“Contrary to the timing of the last monetary policy committee meeting in November, the start of 2019 has seen risk-aversion abate somewhat in global markets as commentary from US monetary authorities has become less hawkish,” Investec Bank economist Annabel Bishop said in a note e-mailed on January 10.

“At the last monetary policy committee meeting, the Reserve Bank delivered a 25 basis point hike, citing concerns over rising interest rates in the US. With these concerns now likely somewhat abated, there is a high likelihood the Reserve Bank will leave the repo rate unchanged next week.”

Nedbank’s economic team said in an e-mail on Wednesday after Stats SA reported November’s annual retail growth was 3.3% versus the economists’ consensus of 2.5%: “There is still no evidence of broad-based inflationary pressures, with inflation expected to drop quite sharply in the coming months due to the lower fuel price.

“This should be sufficient to convince the monetary policy committee to leave interest rates on hold until late this year, when the monetary policy committee is forecast to resume its mild tightening cycle.”

Goldman Sachs rose 9.52% to $197.08 and Bank of America 7.16% to $28.45 on Wednesday after releasing better-than-expected quarterly results, helping the S&P 500 index gain 0.22% to 2,616 points.

Asian stocks generally took their cue from Wall Street, with Naspers’s dominant asset, Tencent, up 1.87% to HK$337.20 in Hong Kong ahead of the JSE’s opening.

However in Sydney, the JSE top 40’s second-biggest constituent, BHP, was down 0.21% to A$32.86.

The rand was trading at R13.70/$, 15.60/€ and 17.64/£ at 6.20am.

laingr@businesslive.co.za