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No change to repo rate - 'Perhaps we've seen the bottom of interest rates'

17 September 2020 8:38 PM
Tags:
South African Reserve Bank
Interest rates
Sarb
Repo rate
The Money Show
Lesetja Kganyago
Bruce Whitfield
MPC
Isaah Mhlanga
Prime Lending Rate

Isaah Mhlanga (Chief Economist, Alexander Forbes) on the reasons for the decision announced by SARB governor Lesetja Kganyago.

Some economists had predicted another cut for an already historically low rate in view of shocking second quarter figures, but the South African Reserve Bank (SARB) says it remains unchanged.

RELATED: Recession deepens with historic 51% second quarter drop in GDP

The Reserve Bank's Monetary Policy Committee (MPC) decided to keep the repo rate at 3.5%

Bruce Whitfield asks Isaah Mhlanga (Chief Economist, Alexander Forbes) whether this isn't surprising in view of the worsening economic outlook for South Africa.

I think the issues of economic growth you mentioned, it's a little bit offset by the reduction in the potential economic growth...

Isaah Mhlanga, Chief Economist - Alexander Forbes

If you look also at their inflation forecast... there isn't much of a change in the inflation outlook...

Isaah Mhlanga, Chief Economist - Alexander Forbes

If you consider those, combined with their view that monetary policy alone cannot fix South Africa's prospects, I think that can give you a sense of why they didn't cut this time around.

Isaah Mhlanga, Chief Economist - Alexander Forbes

"Perhaps we've seen the bottom in interest rates" says Mhlanga, with the potential for increases once the economy (slowly) starts to recover.

It's going to take some time to see some arrival of economic activity that's going to be inflationary... Remember the economy now is at the same level it was in the second quarter of 2007, but also it is an economy that is weak...

Isaah Mhlanga, Chief Economist - Alexander Forbes

Listen to Mhlanga's insights on The Money Show:


17 September 2020 8:38 PM
Tags:
South African Reserve Bank
Interest rates
Sarb
Repo rate
The Money Show
Lesetja Kganyago
Bruce Whitfield
MPC
Isaah Mhlanga
Prime Lending Rate

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