Economists believe SA's central bank can't continue with hawkish tone on interest rates
The inflation print reading released by Stats SA earlier on Wednesday is the lowest in three years.
JOHANNESBURG - Some economists believe the South African Reserve Bank (SARB)'s Monetary Policy Committee (MPC) cannot persist with a hawkish tone on interest rates as another interest rate decision looms.
This follows the annual consumer price inflation drop to 4.6% for July, from 5.1% in the previous month.
The inflation print reading released by Stats SA on Wednesday is the lowest in three years.
Headline inflation has remained in the SARB’s target band of three and six for 12 consecutive months.
ALSO READ: Annual consumer price inflation for July falls to 4.6% - Stats SA
The drop to 4.6% is the closest to the midpoint of the target band that inflation has been in a long time.
Lower inflation trends have now developed earlier than the forecasts of the last MPC meeting - where inflation was only expected to decelerate to 4.5% during the fourth quarter.
Economist at the North-West University Business School Raymond Parsons says it would be difficult for the MPC to justify keeping the repo rate unchanged in the face of the much-improved inflationary outlook.
FNB senior economist Koketso Mano agrees: “People are starting to say the reserve bank is running our of excuses to not cut interest rates.”
The central bank’s next meeting on interest rates is set for September.