Expect another cut in interest rates – already at record-lows – later today
The South African Reserve Bank's Monetary Policy Committee (MPC) is about to announce its interest rate decision.
The economy has shed three million jobs – so far, the carnage is ongoing – but the Sarb is running out of ammunition.
The usually conservative MPC has already slashed the repo rate by 275 basis points so far this year – to 3.75%, the lowest on record.
Nevertheless, most economists predict another 25 basis points, at least.
Will the country’s globally respected Sarb Governor Lesetja Kganyago cut, or won’t he (and by how much, if he does)?
Lester Kiewit interviewed Econometrix Chief Economist Dr Azar Jammine.
Inflation has fallen far more steeply than anticipated… People have been taking substantial pay cuts, so wage inflation has been subdued.Dr Azar Jammine, Chief Economist - Econometrix
The anticipated increase in costs has just not manifested. Businesses are just too keen to sell at any price… in order to generate some form of revenue, better than nothing at all.Dr Azar Jammine, Chief Economist - Econometrix
Consumers who are in debt have received a huge bonanza… The prime rate has already declined from 10% to 7.25% so far this year… an increase in disposable income for consumers by R105 billion…Dr Azar Jammine, Chief Economist - Econometrix
Banks, despite R200 billion in loan guarantees by the government, have been reluctant to lend to businesses in difficulty…Dr Azar Jammine, Chief Economist - Econometrix
A further 25 basis points will provide an additional R8 billion or R9 billion of relief to indebted consumers.Dr Azar Jammine, Chief Economist - Econometrix
Listen to the interview in the audio below.
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