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Economists express mixed views on another interest rate cut

The South African Reserve Bank's Monetary Policy Committee had already cut the repo rate by 275 basis points this year to try and counter the effects of negative growth due to COVID-19.

South African Reserve Bank (Sarb) Governor Lesetja Kganyago. Picture: @SAReserveBank/Twitter

JOHANNESBURG - There were differing opinions from economists on whether the South African Reserve Bank (Sarb) will cut the interest rate on Thursday.

The Sarb’s Monetary Policy Committee (MPC) has already cut the repo rate by 275 basis points this year to try and counter the effects of negative growth due to COVID-19.

The latest figures show that an estimated three million people have lost their jobs since the start of this year.

The Reserve Bank has moved to ease pressure on battling consumers and promote growth. But Nedbank economist Isaac Matshego said that they did not expect another decrease from the MPC on Thursday.

“We have seen the inflation falling slightly to below of what was expected, but we do not believe that it is going to be enough to persuade the Sarb to cut interest rates again,” Matshego said.

However, director and chief economist at Econometrix, Dr Azar Jammine, said that there was room for another cut.

“There is variance in terms of whether or not that rate cut shout be half a percent or a quarter of a percent,” Jammine said.

The Reserve Bank indicated at its last announcement that there was still a little wiggle room to adjust rates, but it would be cautious.

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