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Economists 'expected' repo rate increase

Nedbank's Mohammed Nalla says while the consumer is likely to feel the pinch the hike was expected.

new Mandela money
reserve bank,Repo rate,Reserve Bank Governor Lesetja Kganyago
Local Business

JOHANNESBURG – Economists say the Reserve Bank’s decision to increase the repo rate by 25 basis points falls within the targets initially forecast for the South African economy.

This afternoon Reserve Bank Governor Lesetja Kganyago hiked the repo rate to 7 percent pushing prime to 10,5 percent.

Economists say the move is not surprising and reflects the realities of a weakening rand, the global struggle of emerging markets and inflationary pressures worldwide.

Industry specialists say the Reserve Bank has strict criteria to follow when making such a decision - but the drought and South Africa's political landscape are contributing factors.

Nedbank's Mohammed Nalla says while the consumer is likely to feel the pinch the hike was expected.

“I don’t think it was anything that was untoward or unexpected by the markets, 25 basis points seemed to have been the census expectation. It was our expectation at Nedbank and was aligned to what we are seeing in terms of some of the inflationary pressures in South Africa.”   

At the same time, Argon Asset Management's Thabi Leoka says another petrol increase could be on the cards.

“The weak currency is negating any benefits from weaker oil prices, unfortunately even though global oil prices remain weak, we are likely to see increases in fuel prices.”   

(Edited by Refilwe Pitjeng)


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