Consumers will be holding their breath as the South African Reserve Bank (SARB) will announce its Monetary Policy Committee’s (MPC) decision on the country’s interest rates on Thursday.
Many economists have been split over what the SARB governor Lesetja Kganyago will announce, with some saying the country is in for another 25 Basis Point (BPS) hike, while others say it will remain unchanged.
South Africans were served some good news yesterday when it was revealed that the annual headline inflation rate decreased in June, reports IOL.
Stats South Africa announced that consumer prices dramatically retreated to their lowest in 20 months in June, dragged lower by fuel and food prices during the month.
Annual headline inflation cooled to 5.4% in June from 6.3% year-on-year in May, sinking below the upper limit of the SARB monetary policy target range.
On Thursday the MPC will meet to decide whether the repo rate should be increased, decreased, or kept the same, and while there is some belief that the declining inflation may see a stable repo rate, economists are not convinced this will be the case.
“My feeling is that this will be a close call, and we are likely to see the MPC more divided,” says Angelika Goliger.
“But I still think that a 25bps increase is on the cards.”
She says the inflation war is still being fought, with some components of inflation, such as food prices in South Africa, remaining high.
“The US Federal Reserve is expected to hike its benchmark rate by a final 25bps, so the MPC would likely want to support the Rand through its rate decision.”
dailyvoice@inl.co.za