SA expects just one more interest rate cut this year as inflation rises
Investec chief economist Annabel Bishop said that this was despite the South African Reserve Bank having the space to cut interest rates by as much as 1.5 percentage points this year and in 2026. The Bank's Monetary Policy Committee (MPC) will make the interest rate announcement tomorrow afternoon.
'With CPI inflation expected to average just above 4.0% year-on-year in the MPC's forecast period, the current 7.25% repo rate could afford to drop,' said Bishop. However, she said additional cuts of up to 1.5 percentage points are not expected this year.
This would bring the prime lending rate down to 10.5%.
Bishop's view aligns with that of other economists, with Old Mutual chief economist Johann Els having said that there will likely be a 0.25 percentage point cut this week, while Standard Bank's group head of South Africa macroeconomic research, Dr Elna Moolman has also argued that there should be a cut.
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