Economists Divided: Should the SARB MPC cut the repo rate?

CAPE TOWN – The South Africa Reserve Bank (SARB) is expected to hold the repo rate this week, despite nearly half of economists on Finder’s repo rate panel calling for a rate cut.

Twelve of 14 economists (86 percent) on Finder’s panel said the SARB’s Monetary Policy Committee (MPC) would hold the rate, with just two (14 percent) expecting a cut.

However the panel is nearly evenly split on what the bank should do, with 57 percent of economists thinking a hold would be the right decision and 43 percent saying the central bank should cut the rate.

Antswisa Transaction Advisory Services chief executive and chief economist, Miyelani Mkhabela, said the rate should and would be cut given the inflation rate slowed in September.

“This gives the SA Reserve Bank an opportunity to cut interest rates by 25 basis points, giving all South Africans additional financial relief for the 2020 year-end,” he said.