Repo rate could drop significantly in 2024, economist predicts
Mpho Molopyane, who is JSE-listed financial services firm Alexforbes’ chief economist, expects the Reserve Bank to cut the repo rate by 75 basis points during the course of 2024.
Molopyane’s prediction comes ahead of the first meeting of the Reserve Bank’s Monetary Policy Committee, which is expected to make a repo rate announcement on Thursday.
Speaking on Wednesday, Molopyane said they expect the cuts during the second half of the year.
"What we have currently pencilled in, is 25 basis points worth of cuts in each of the three meetings in the second half of the year. We do think the SARB will continue to cut into 2025 by about 50 basis points bringing the nominal repo rate to about 7.5%. We think that is where SARB will stop cutting.
"What we have taken into account is the SA risk premium, which we estimated about 2.5. So, we do think that nominal rates will have to stabilise at 7.5, taking into consideration that headline CPI settles at about 4.5%, so that gives you the real rate of 2.5%.”
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