Forecast: The SARB Expected to Maintain 8.25% Repo Rate

• A financial expert predicted that the South African Reserve Bank would keep the repo rate unchanged at 8.25%
• Tonny Molise shared his prediction ahead of the Monetary Policy Committee’s announcement on 18 July 2024
• Molise said with the country not developing as it should, he foresees the rates remaining unchanged until 2025

Zingisa Chirwa is an experienced Briefly News journalist based in Johannesburg, South Africa, who has covered financial and current affairs on the radio for over 15 years.

A financial expert predicts that the South African Reserve Bank will keep the repo rate unchanged at 8.25% and prime lending at 11.75%.

MPC to decide on repo rate

Business Development Manager Tonny Molise shared his prediction ahead of the Monetary Policy Committee’s (MPC) meeting on 16 July 2024, which will culminate in the repo rate announcement on 18 July 2024.

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Molise said the outlook hadn’t changed much from May 2024, with the Consumer Price Index (CPI) sitting at 5.2%, slightly higher than the 4.5% mid-point of the SARB’s target range. He, however, said growth estimates would provide some insight into future inflationary pressures:

“Some European countries have dropped interest rates, and we expect the United States to do the same this year now that inflation has cooled to 3.1% lower than expected, down to a 2% goal range. They are observing an increase in unemployment, indicating an increased likelihood of a cut in September.”

Suez unrest fuels shipping costs

Molise said the ongoing unrest in the Suez Canal led to import and export delays, thus hiking insurance costs and ultimately pushing up import and Brent crude prices.

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On the local front, Molise said the high unemployment damaged customer confidence, coupled with companies such as MultiChoice, Pick n Pay and West Pack filing for business rescue, reflected the difficult economic conditions that the country was experiencing:

“SA's economy is still not developing as it should, and inflation is not yet cooling down. I expect the SARB to maintain interest rates unchanged until 2025.”

South Africans demand wage growth policies

Briefly News previously reported that South Africans called for policies that supported wage growth in line with inflation.

Despite a 4.6% year-on-year increase, wages had not kept pace with the 5% inflation rate, leading to a drop in purchasing power.

Experts emphasised the need for sustainable economic policies to improve living standards.

Source: Briefly News