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Sarb still expected to cut repo rate later this year

Economists say the rand and the risks such as political noise will playing a major role.

FILE: Lesetja Kganyago, Governor of South African Reserve Bank. Picture: World Economic Forum.

JOHANNESBURG - Economists say they still expect the South African Reserve Bank to cut the repo rate later this year, despite the decision to keep it unchanged at 6.75%.

Governor Lesetja Kganyago announced on Thursday that the Monetary Policy Committee was split on deciding whether to cut the rate.

He says the bank has taken a number of factors into account, including the rand and overall growth.

The Governor says although inflation is between 3% and 6%, there are concerns that the volatile rand and high oil price could impact on this.

Nedbank economist Isaac Matshego says the rand is playing a major role.

“We expect that there could be a higher chance of the cut in November but that will depend on movement of the rand.”

Argon Asset Management's Thabi Leoka says she has been expecting the bank to cut rates.

“I expected them to cut back in five basis points in September and again in November and then wait and see because there are heightened risks that such as political noise."

Kganyago says the bank will adopt a wait and see approach before deciding on its next move.

(Edited by Winnie Theletsane)