Repo rate set stay when MPC meets
Chief Economist at Econometrix Azar Jammine says the South African Reserve Bank's Monetary Policy Committee will likely keep the repo rate unchanged.
The Reserve Bank’s MPC will meet for the first time this year, with governor Lesetja Kganyago set to announce the outcomes on Thursday.
In November, the Reserve Bank kept the repo rate unchanged at 8.25%, leaving the prime lending rate at 11.75&.
"At no stage in the past year and a bit has there been such certainty that nothing is going to change,” said Jammine.
"Indeed, the Reserve Bank has already intermated through the governor Lesetja Kganyago in an interview at Davos last week that there was little chance of interest rates coming down.”
Jammine said the general elections, expected to be held in the first half of the year, will also play on the MPC’s mind when it meets this week.
"There is a concern about the fiscal situation in South Africa, and that could precipitate a run on the rand possibly, should the government, especially in the event of general elections, have to merge with, for example, the EFF and you then see populist policies being introduced.
"More recently, there has been a pushback on such optimism and internationally as well, there are concerns that inflationary pressures might not be as dominant as previously believed," he added.
The Monetary Policy Committee will meet on Wednesday to deliberate on domestic and international financial data, with the repo rate announcement expected on Thursday.
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