Latest news with #AnnabelBishop

IOL News
16 hours ago
- Business
- IOL News
SA expects just one more interest rate cut this year as inflation rises
South Africans are likely to only get the benefit of one more interest rate cut this year on Thursday as inflation is set to rise in the coming months. 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.


News24
2 days ago
- Business
- News24
Rand on the ropes over trade and rates
Most emerging market currencies fell against a stronger dollar on Tuesday while stocks were mixed as investors awaited a slate of upcoming economic data, as the US tariff deadline drew closer. MSCI's gauge tracking emerging market currencies fell 0.3% to its lowest level since late June, in a third session of declines. The dollar index rose 0.2%, hovering near its five-week high, after surging 1% in the previous session. Markets rewarded the greenback after the United States clinched a key trade deal with the European Union days ahead of the August 1 deadline, while talks with China continued. US President Donald Trump on Monday said that trading partners that do not negotiate separate deals would soon face tariffs between 15% to 20%, well above the previously threatened 10%. Most currencies in Asia weakened against the dollar, and so did South Africa's rand, which was on track for its fourth session of losses. The rand hit R17.9865/$ early on Tuesday. It last traded above R18 more than a month ago. By midday, it was trading around R17.93. 'The impact of tariffs on the domestic currency, if a trade deal is not reached for SA with tariffs around 15%, would be negative, as South Africa would lose on competitiveness, particularly motor vehicle and food exports to the US, reducing export activity,' said Investec chief economist Annabel Bishop. Bishop added that an expectation that SA rates will be cut by 25 basis points on Thursday - while US rates are expected to be left unchanged - added to the rand's weakness this week. 'The US has not cut its interest rates this year, while SA has cut twice, once in January and once in May, by -25bp each time, narrowing the differential between US and SA interest rates, and reducing the relative interest rate return,' Bishop said. Emerging markets have found themselves in the crosshairs of Trump's tariffs, with duties threatened on Brazil, Mexico, the BRICS group of which Brazil and South Africa are members, and many Asian countries. "We will settle with just over 15% tariffs... while negative from a macro point of view, the world can live with these levels of tariffs," said Mohit Kumar, chief European economist at Jefferies. "Eventually, it boils down to the data and we could see weakening in August data." The impact of tariffs has started to show in US inflation data, and investors will scrutinise economic data scheduled through the week for more such signs. Regional stocks were broadly higher, with Poland and Romania bouncing back 1% and 0.2% respectively, while South African stocks were up 0.6%. Still, MSCI's index tracking global EM stocks was down 0.3%, with declines in some heavyweight Asian stocks weighing. Currencies in emerging Europe weakened against the euro, as optimism over trade deals faded, with investors concerned about its implication for Europe. The Hungarian forint was down 0.8% and set for its steepest one-day decline since April 11. The government slashed its 2025 growth forecast to 1%, down from 2.5%, prolonging a recovery from a 2022 inflation surge. Poland's zloty slipped 0.4%. Its prime minister said that U.S. tariffs on European products could cost Poland around 8 billion zlotys (R39 billion), per preliminary estimates. Russia's rouble fell 1.3% against the dollar, over-the-counter market data showed, a day after Trump shortened his deadline for Russia to end its war in Ukraine or face tariffs.

IOL News
7 days ago
- Business
- IOL News
South Africa's economic growth outlook: What to expect in the coming months
Although Investec sees better second quarter economic growth than the first, but not by a large amount.. Although the economy doesn't look very bright at the moment, with forecasts having recently been trimmed on the back of US President Donald Trump's pending 30% in tariffs, all may not be doom and gloom. The South African Reserve Bank's (SARB's) Composite Business Cycle Indicators may show that the next six to 12 months don't look that positive, the current position and that of the most recent economic situation, gained. Commenting on the latest indicator, Investec chief economist Annabel Bishop said that she anticipates a better gross domestic product (GDP) growth rate in the second quarter than the first three months of the year. However, Bishop does not expect to see especially strong growth in the second quarter. In the first quarter, GDP came in at a mere 0.1%, with the fact that it gained at all being due to agriculture. This figure surpassed economists' expectations. The economy grew 0.6% last year. Investec Wealth & Investment's data shows that growth has averaged 4.5% since 2010, and the unemployment rate would be significantly lower.


Zawya
23-07-2025
- Business
- Zawya
South Africa's small inflation rise leaves room for rate cuts, analysts say
South Africa's inflation rate edged higher in June, reaching the base of the central bank's target range, but analysts said there was still scope to ease monetary policy. Headline consumer inflation rose to 3.0% year-on-year, up from 2.8% in May and in line with the median forecast of economists polled by Reuters. The South African Reserve Bank has cut its repo rate at four of its last five policy meetings as, since August 2024, inflation has been below the 4.5% level it aims for. That is the centre of the bank's 3%-6% band and the bank, known for its caution, has repeatedly said it would prefer to lower the target. Statistics South Africa said annual inflation for food and non-alcoholic beverages hit a 15-month high in June, a significant contributor to the higher headline rate. Higher costs for rentals and utilities also drove inflation upwards, while fuel prices extended their decline for the fourth straight month. Annabel Bishop, chief economist at Investec, said inflation was likely to rise towards 4% by the end of the year but the real interest rate was very high with the repo rate at 7.25% now. "We expect at least one further 25 basis point cut in the repo rate this year," she said in a research note. The central bank will announce its policy decision on July 31, the day before President Donald Trump's 30% tariff on South African exports to the U.S. is due to come into force. Since the May policy meeting, analysts, business people and trade unions have lowered their inflation forecasts in a survey the central bank factors into its rate decisions. David Omojomolo at Capital Economics said South Africa's struggling economy strengthened the case for policy easing. (Reporting by Kopano Gumbi; Editing by Alexander Winning and Barbara Lewis)


Reuters
23-07-2025
- Business
- Reuters
South Africa's small inflation rise leaves room for rate cuts, analysts say
JOHANNESBURG, July 23 (Reuters) - South Africa's inflation rate edged higher in June, reaching the base of the central bank's target range, but analysts said there was still scope to ease monetary policy. Headline consumer inflation rose to 3.0% year-on-year, up from 2.8% in May (ZACPIY=ECI), opens new tab and in line with the median forecast of economists polled by Reuters. The South African Reserve Bank has cut its repo rate (ZAREPO=ECI), opens new tab at four of its last five policy meetings as, since August 2024, inflation has been below the 4.5% level it aims for. That is the centre of the bank's 3%-6% band and the bank, known for its caution, has repeatedly said it would prefer to lower the target. Statistics South Africa said annual inflation for food and non-alcoholic beverages hit a 15-month high in June, a significant contributor to the higher headline rate. Higher costs for rentals and utilities also drove inflation upwards, while fuel prices extended their decline for the fourth straight month. Annabel Bishop, chief economist at Investec, said inflation was likely to rise towards 4% by the end of the year but the real interest rate was very high with the repo rate at 7.25% now. "We expect at least one further 25 basis point cut in the repo rate this year," she said in a research note. The central bank will announce its policy decision on July 31, the day before President Donald Trump's 30% tariff on South African exports to the U.S. is due to come into force. Since the May policy meeting, analysts, business people and trade unions have lowered their inflation forecasts in a survey the central bank factors into its rate decisions. David Omojomolo at Capital Economics said South Africa's struggling economy strengthened the case for policy easing.