No change to repo rate - 'Perhaps we've seen the bottom of interest rates'
Some economists had predicted another cut for an already historically low rate in view of shocking second quarter figures, but the South African Reserve Bank (SARB) says it remains unchanged.
The Reserve Bank's Monetary Policy Committee (MPC) decided to keep the repo rate at 3.5%
Bruce Whitfield asks Isaah Mhlanga (Chief Economist, Alexander Forbes) whether this isn't surprising in view of the worsening economic outlook for South Africa.
I think the issues of economic growth you mentioned, it's a little bit offset by the reduction in the potential economic growth...Isaah Mhlanga, Chief Economist - Alexander Forbes
If you look also at their inflation forecast... there isn't much of a change in the inflation outlook...Isaah Mhlanga, Chief Economist - Alexander Forbes
If you consider those, combined with their view that monetary policy alone cannot fix South Africa's prospects, I think that can give you a sense of why they didn't cut this time around.Isaah Mhlanga, Chief Economist - Alexander Forbes
"Perhaps we've seen the bottom in interest rates" says Mhlanga, with the potential for increases once the economy (slowly) starts to recover.
It's going to take some time to see some arrival of economic activity that's going to be inflationary... Remember the economy now is at the same level it was in the second quarter of 2007, but also it is an economy that is weak...Isaah Mhlanga, Chief Economist - Alexander Forbes
Listen to Mhlanga's insights on The Money Show:
This article first appeared on 702 : No change to repo rate - 'Perhaps we've seen the bottom of interest rates'
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