https://www.engineeringnews.co.za
Africa
Africa
africa

Reserve bank to cut rates less than earlier thought in 2024 – poll

Rand Currency

Photo by Reuters

18th April 2024

By: Reuters

  

Font size: - +

South Africa's central bank is now predicted to deliver only 50 basis points of interest rate cuts this year, less than earlier projected as inflation is seen taking slightly longer to return to the Reserve Bank's comfort zone, a Reuters poll found.

A cut of 25 bps to 8.00% next quarter, either in July or September, is expected from the Reserve Bank, according to a survey carried out in the past week, compared with 50 bps predicted in a March poll.

The repo rate will finish the year at 7.75% instead of the 7.50% predicted last month if the central bank delivers another cut in November as the latest poll predicts.

"We now forecast a more drawn-out, shallower easing cycle in South Africa," wrote Razia Khan, head of macro research for the region at Standard Chartered.

Although inflation will likely dip below the mid-point of the central bank's target band in the fourth quarter it may ease hesitantly, Khan added.

There will be a temporary dip in inflation in the last quarter of 2024 before it quickens again early next year, the poll showed.

The central bank kept its main interest rate unchanged in March, saying restrictive policy was still needed to address elevated inflation expectations.

It also said it did not expect headline inflation to reach the 4.5% midpoint of its target range before the end of 2025, later than previously forecast. The poll, however, suggests that could happen in the third quarter of next year.

Inflation is expected to average 5.1% this year and 4.6% next, the survey showed. Consumer inflation fell slightly more than expected in March, to 5.3%, but analysts are wary.

Volkan Sezgin, senior economist at Continuum Economics, said the drop could be short-lived because of drought conditions, rising oil prices and renewed rand weakness.

"We continue to foresee the South African Reserve Bank will likely delay the rate cuts to Q3 until after the May 29 elections, if the Q2 CPI trajectory allows," added Sezgin.

South Africa - the continent's most industrialized economy - is due to vote in general elections next month, the same month as the next Reserve Bank meeting. Only two of 20 economists expect a rate cut at that meeting.

The economy is expected to grow 1.1% this year, unchanged from last month's survey and 1.6% next year, 0.1 percentage point better than had been predicted.

Edited by Reuters

Comments

Showroom

Rentech
Rentech

Rentech provides renewable energy products and services to the local and selected African markets. Supplying inverters, lithium and lead-acid...

VISIT SHOWROOM 
SABAT
SABAT

From batteries for boats and jet skis, to batteries for cars and quad bikes, SABAT Batteries has positioned itself as the lifestyle battery of...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Uniclox at Nampo 2024
Uniclox at Nampo 2024
Updated 6 hours ago
Dachser South Africa at Nampo 2024
Dachser South Africa at Nampo 2024
Updated 6 hours ago
AUTO-X at Nampo 2024
AUTO-X at Nampo 2024
Updated 6 hours ago
Astron Energy at Nampo 2024
Astron Energy at Nampo 2024
Updated 6 hours ago

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.41 0.461s - 163pq - 2rq
Subscribe Now