South African Reserve Bank Expected To Cut Interest Rates, Wits Economist speaks to Briefly News

• Economists in South Africa reportedly expect that the Reserve Bank will cut interest rates
• This could be because of positive inflation numbers and the US Federal Reserve Bank's half-percent cut
• South Africans had mixed feelings, as some hoped more than 50 basis points would cut the interest rate
• Dr Kenneth Creamer, Economist at Wits University, told Briefly News what he thought of the expected cuts

Tebogo Mokwena, Briefly News's current affairs journalist, covered current affairs relating to the economy, finance, banks, and state-owned enterprises during his seven years at Daily Sun and Vutivi Business News.

JOHANNESBURG—The South African Reserve Bank is expected to announce inflation rates, and economists believe that interest rates could be slashed.

Could interest rates be cut?

According to eNCA, economists believe that the central bank could cut interest rates by 25 basis points. This was after the Consumer Price Inflation cooled to 4.4 per cent recently. Azar Jammine, Chief Economist at Econometrix, said that the inflation rate declined more than expected, and this had to do with fuel price decreases for four months.

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He said there is a possibility that oil prices could decrease because of falling oil prices and the strengthening of the rand against the dollar due to the dollar's weakening and increased confidence in the country's new Government of National Unity.

Dr Creamer speaks to Briefly News

Speaking to Briefly News, Dr Kenneth Creamer, an Economist from Wits University, discussed how a cut in the interest rate would boost the economy.

"The fact that South Africa’s inflation is currently lower now than it has been for a number of years and that inflation is well within the country’s 3% to 6% inflation target range, and the fact that fuel prices have come down in recent weeks, makes it easier for the SARB to cut interest rates.

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"Also, the fact the United States yesterday reduced interest rates for the first time in four years makes it easier for South Africa to cut interest rates without as much risk that this will trigger an immediate weakening of the Rand and all the inflationary pressures that such a Rand depreciation would cause."

He said that an interest rate cut in South Africa would help boost economic demand and relieve some pressure on households that have to pay back their debts based on variable-interest loans and housing bonds.

"Lower interest rates, together with improved confidence associated with the GNU, are hoped to stimulate greater growth, investment, and job creation in the South African economy in the months ahead."

Netizens hopeful of interest cut

South Africans commenting on @eNCA's tweet crossed their fingers and hoped for the best. Some were not surprised.

NaNgoma said:

"Please, and not with 50 or 25. Cut those interest rates for real."

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Ssyd said:

"This was expected. Provided the new government doesn't fail."

King Llane Wrynn said:

"Do that ASAP."

Reg said:

"It's about time."

SaltySach said:

"100 basis points minimum."

Kingmathibela said:

"Good news."

Zondi Motha said:

"The only job that's badly performed by the governor: interest rates increasing."

SARB expected to maintain repo rate

In a related article, Briefly News reported that a financial expert predicted in July that the repo rate would remain at 8.25%.

A financial expert shared his prediction, saying that because their country is not developing as fast as it should, the repo rate could remain unchanged.

Source: Briefly News