A repo rate cut would be no more than economic Band-Aid

JOHANNESBURG – The country’s cash-strapped consumers would look to the SA Reserve Bank (SARB) for a further easing or maintenance of monetary policy to protect them from the deteriorating state of the economy.

Experts have hinted at the possible easing by the central bank’s Monetary Policy Committee (PMC) in order to provide liquidity into the economy and relief as Covid-19 continue to put more pressure on the consumers.

Investec’s Kamilla Kaplan said there was an expectation that the MPC would keep the repo rate unchanged at 3.5 percent.

Kaplan said though consumer price inflation (CPI) was forecast to increase back towards the mid-point of the target range next year, supporting the argument for an unchanged repo rate.

“CPI inflation is expected to rise on the effects of a higher fuel price and substantial electricity price increases. However, the SARB previously indicated that it is leaning towards further rate cuts.”