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Reserve Bank likely to leave rates on hold for now - economists

Members of the Reserve Bank’s Monetary Policy Committee would have over the past two days weighed up a number of factors when deciding on the next interest rate decision.

FILE: SA Reserve Bank Governor Lesetja Kganyago. Picture: Cindy Archillies/EWN

JOHANNESBURG - Economists say the South African Reserve Bank will likely leave rates on hold on Thursday despite the improving inflation outlook.

The central bank last cut the repo rate in July by 25 basis points as consumer inflation remained within its target of 3% to 6%.

That number currently stands at 5.2%.

Members of the Reserve Bank’s Monetary Policy Committee would have over the past two days weighed up a number of factors when deciding on the next interest rate decision.

Faced with low growth, the stronger rand and an improving inflation outlook, Stanlib’s chief economist Kevin Lings believes that the central bank has room to cut rates.

But he says that risks on the horizon will keep them at bay, at least for now.

“There’s still come uncertainty around the credit rating decision in March and the transition in the leadership of the government.”

Nedbank economist Busisiwe Radebe agrees.

“What they are going to do is just leave rates on hold to see what’s going to happen with the rand.”

The Reserve Bank will also be concerned about the upward trajectory of global interest rates.