No interest rate cut on the horizon this year

JIMMY MOYAHA: So the monetary policy meeting kicked off today. We know that the Monetary Policy Committee [MPC] is going to be meeting for the next three days with an interest rates announcement coming out on Thursday. I’m joined on the line by chief economist and head of research at RMB [Rand Merchant Bank], Mr Isaah Mhlanga, to look at what we can expect from this MPC reading. Good day, Isaah, thank you so much for your time as always.

JIMMY MOYAHA: Let’s look at those expectations and in the context of the CPI figure, how important is tomorrow’s CPI figure going to be because, as you rightly mentioned, we’re expecting 5.4%. If we come in around that, we’re back within that target 3% to 6% range. How will this impact, or influence rather, the decision that we get on Thursday?

JIMMY MOYAHA: Is there any room for another 25-basis point cycle, even another 50-basis point cycle, given that we’ve seen institutions like Fitch have affirmed our ratings status, but have warned that we still have a lot of work to do? Is there room in the economy, is there room in consumers’ pockets for another rate hike?

So the quicker they manage to push inflation lower into the target band and closer to the midpoint, the quicker interest rate cuts are likely to come. So if we don’t see that process happening quicker, it means consumers will still face high inflation, which hits the poorest the most because they don’t have mechanisms to actually circumvent it.

Source: Loan Digest (loandigest.net)

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