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MPC meets over interest rate decision as SA awaits Moody's review

Some economists expect the Reserve Bank to keep the repo rate at 7% for the 14th consecutive month.

FILE: Lesetja Kganyago, Governor South African Reserve Bank (SARB), at the World Economic Forum on Africa 2017 in Durban, South Africa, 2017. Picture: World Economic Forum.

CAPE TOWN - The Monetary Policy Committee (MPC) will on Tuesday start meeting to discuss whether interest rates should be hiked, while the country awaits another credit rating announcement.

Moody's is reviewing South Africa's rating which currently is at two notches above sub-investment grade.

Standard and Poor’s Global placed the country's foreign denominated debt at sub-investment grade. Fitch followed suit.

Some economists expect the Reserve Bank to keep the repo rate at 7% for the 14th consecutive month.

Governor Lesetja Kganyago has said they may have reached the end of a tightening cycle, with a more sustained improvement in the inflation outlook required for a rate cut.

Kganyago has stuck to this forecast despite downgrades.

He says he remains confident that inflation will pull back to within the target range of between 3 %and 6% in the second quarter.

Meanwhile, Moody's is expected to make its announcement on South Africa's credit rating soon, citing the Cabinet reshuffle as the reason it is being revised.

Some experts have warned that another downgrade of the country's rand-denominated debt could lead to massive capital outflows.

(Edited by Shimoney Regter)