Room For Repo Rate Cut, According To Some Economists

South African Reserve Bank
South African Reserve Bank

With inflation at its lowest rate in eight years, some economists argue there is room for the South African Reserve Bank (Sarb) to lower the repo rate on Thursday afternoon.

On Wednesday, Stats SA announced that the headline consumer price index fell to 3.7% in October, down from 4.1% the month before.

The monetary policy committee decided to keep the rate unchanged at its last meeting citing factors that could influence inflation.

Inflation has continued its downward move with consumer spending also subdued.

Independent economist Richard Downing said: “In terms of interest rates, I think there is some room at the moment because real interests will be affected by lower inflation.”

Economist Thabi Leoka said while there may be good news for those with debt, not all South Africans will benefit if the repo rate decreases.

“So, for the majority of South Africans, a rate cut may not have a significant impact.”

With the festive season fast approaching, there may be good news on Thursday afternoon for many cash-strapped South Africans, although those with savings may not agree.


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