The Sarb may not want to trim rates prematurely - economist

The monetary policy committee is meeting on Thursday to decide whether to keep interest rates unchanged or cut them.

Dr Goolam Balim, Standard Bank Economist says he's hesitant to believe the Reserve Bank will trim the interests rates.

Ordinarily, if one considers the inflation pass, at least for the next two years, remains locked within the 3% to 6% target zone and secondly the economy is weak. Those two suggestions would imply that the Reserve Bank must cut interest rates.

Dr Goolam Balim, Standard Bank Economist

However, the one retarding factor, quite simply, we are functioning in an incredibly precarious political environment.

Dr Goolam Balim, Standard Bank Economist

Balim goes on to say that the Public Protector's suggestion that the Sarb needed to re frame its mandate, precipitated a noticeable depreciation in the rand.

The Sarb may not want to trim rates prematurely adds Goolam.

The South African economy does display a real, positive interest rate.

Dr Goolam Balim, Standard Bank Economist

Balim explains that when an economy is this fragile then a reserve bank would want to maintain positive real rates because these rates entice foreign investment into the local deposit market.

They could trim rates if inflation continues to fall because we'll still maintain some margin of real rates which may open up a segway to believe that a maybe a modest 25 basis point rates cut will on the cards says Balim.

That would the desired outcome and will carry some degree of hope, he concludes.

Take a listen:


This article first appeared on 702 : The Sarb may not want to trim rates prematurely - economist


CapeTalk welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

  • Racism (including offensive comments based on ethnicity and nationality)
  • Sexism
  • Homophobia
  • Religious intolerance
  • Cyber bullying
  • Hate speech
  • Derogatory language
  • Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the CapeTalk community a safe and welcoming space for all.

CapeTalk reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

CapeTalk is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

Read More
5 reasons interest rates will not come down (yet)

5 reasons interest rates will not come down (yet)

The Money Show’s Bruce Whitfield interviews FNB Economist Mamello Matinkica.

Mbete must recuse herself for Zuma no confidence vote, argue opposition parties

Mbete must recuse herself for Zuma no confidence vote, argue opposition parties

Opposition parties leaders believe that National Assembly Speaker Baleka Mbete is compromised after her comments on the judiciary.

Public Protector's error suggests monumental incompetence - law specialist

Public Protector's error suggests monumental incompetence - law specialist

Mkhwebane faces criticism following her recommendations that Parliament change laws to alter the power of the Reserve Bank.

"Mkhwebane initially denied the report's existence so she has lied"

"Mkhwebane initially denied the report's existence so she has lied"

Advocate Paul Hoffman says PP's response to Sarb issue is long overdue and calls for an inquiry into her fitness to hold office.

[LISTEN] Mkhwebane's office adamant PP  did not err

[LISTEN] Mkhwebane's office adamant PP did not err

Public Protector's Cleopatra Mosana defends her boss's about-turn on Sarb decision in a heated discussion with Eusebius Mckaiser.

PP's actions have eroded public confidence - law expert

PP's actions have eroded public confidence - law expert

Director at the Centre for Constitutional Rights, Phephelaphi Dube says there is no room for mistakes at that level.

Hawks robbery could be a war between intelligence agencies: Brown

Hawks robbery could be a war between intelligence agencies: Brown

Karima Brown talks to Xolani Gwala about the Hawks break-in and the PP being "out of her lane, Constitutionally".

Tips on Safe Cycling

Tips on Safe Cycling

Full road closure which allows cyclists to ride safely and enjoy the roads in Joburg for the Telkom 947 Cycle Challenge is a plus.

"Removing the minority shareholders of the SARB will not change its mandate"

"Removing the minority shareholders of the SARB will not change its mandate"

Economist Isaac Matshego gives his take on a proposal by the ANC to change ownership of Reserve Bank.

Reserve bank proposal is in line with majority of  OECD countries - Brown

Reserve bank proposal is in line with majority of OECD countries - Brown

Karima Brown explains a proposal by some ANC members to look into changing ownership of the SARB.

Why the ANC is gunning for the Reserve Bank (holder of ‘money printing presses’)

Why the ANC is gunning for the Reserve Bank (holder of ‘money printing presses’)

It’s more complicated than a capture, says Investec Economic Strategist Chris Becker.

What the Google fine might say about the future control of the internet

What the Google fine might say about the future control of the internet

How an organisation you may not have heard of controls the internet and may be needed to control more of it.

5 things to look out for at the ANC’s National Policy Conference

5 things to look out for at the ANC’s National Policy Conference

This time is very different, says Nomura International Emerging Markets Economist Peter Attard Montalto.

PP's motive is to take the heat off JZ and the Gupta's - Eusebius

PP's motive is to take the heat off JZ and the Gupta's - Eusebius

Eusebius McKaiser speculates on what he believes the Public Protector's motives are with her call for Constitutional changes.

Popular articles
Predictably awesome new Nando's ad reminds South Africans ‘we can fix our sh$t’

Predictably awesome new Nando's ad reminds South Africans ‘we can fix our sh$t’

Watch the Guptas pack their bags and run in Nando's inspiring new advertisement.

PSG Chair Jannie Mouton opens up (kind of) about Steinhoff

PSG Chair Jannie Mouton opens up (kind of) about Steinhoff

In 2012 Steinhoff acquired 20% of wealth manager PSG, reportedly infuriating Mouton. Bruce Whitfield interviews him.

[LISTEN] Sara-Jayne King overjoyed at finding her biological father

[LISTEN] Sara-Jayne King overjoyed at finding her biological father

After a 702/ CapeTalk interview, the author of the autobiographical book Killing Karoline spoke to her dad for the first time.

[LISTEN] Caller challenges Eusebius on land disposition

[LISTEN] Caller challenges Eusebius on land disposition

‘I need you to provide me with an answer' - John from Edenvale, Gauteng

Number of South Africans visiting the seaside has dropped

Number of South Africans visiting the seaside has dropped

Fedhasa's CEO is encouraging South Africans to take a look at the specials that are currently out there and make their bookings.

How businessman Max Lichaba struck gold with his jewellery company

How businessman Max Lichaba struck gold with his jewellery company

Entrepreneur Max Lichaba built his own empire and is the CEO of Lichaba Creations and several other businesses. This is his story.