South African Reserve Bank

November 19, 2020

Although the South African Reserve Bank’s repo rate was left unchanged at 3.5%, the vote not to ease of 3-2 was razor-thin. Each dissenter preferred a 25-basis point cut to add to earlier easing moves this year of 25 basis points in January, 100 bps each in March and April, 50 bps in May and 25 bps in July. According to a released statement today, real GDP in South Africa is likely to plunge 8% this year and then recover only 3.5% in 2021 and 2.4% in 2022. Each of those forecasts represents a downward revision. Officials also expect CPI inflation of 3.2% in 2020, 3.9% next year and 4.4% in 2022. Officials do not expect to be hiking rates before the second half of next year, and with future policy hinging importantly on the evolution of the Covid pandemic, one can’t entirely rule out theĀ  possibility of a cut.

Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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