Deficit data eases pressure on Reserve Bank
Pressure has eased on the Reserve Bank to raise interest rates this week as better-than-expected key economic data has boosted hopes for rate cuts later this year. An improvement in the trade deficit, which results in cheaper imports and an easing of high inflation, coupled with a stronger rand bode well for deliberations when the monetary policy committee meets from Tuesday to Thursday. Economists believe interest rates may have peaked and the next move is downwards. The committee has kept rates steady for the past 12 months, following sustained increases between January 2014 and March last year, which resulted in a cumulative increase of 200 basis points. Elna Moolman, an economist at Macquarie Securities, said economists were likely to pay more attention this week to "whether the [Reserve Bank's] rhetoric becomes less hawkish". A less hawkish Reserve Bank will strengthen Macquarie's prediction of two 25-basis-point rate cuts at each of the last two committee meetings of 2017, in ...
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