Nine-year low in inflation may lead to interest rate cut in January
Economists’ opinion yesterday dovetailed on the possibility of a cut after Statistics South Africa (StatsSA) revealed that annual inflation eased to 3.6percent in November from 3.7percent in October, due to lower transport inflation after petrol and diesel prices decreased by 13cents a litre and 14c/litre respectively at the beginning of the month, bringing the annual decline for the year to R1.
Senior research analyst at FXTM, Lukman Otunuga, said low inflation would strengthen the rand against the dollar, and markets would expect the Sarb to lower the interest rates.
November’s reading was the third successive month of falling inflation, and the lowest since December 2010, when the rate was 3.5percent.
“Annual inflation in South Africa has cooled to its lowest level since December 2010, market speculation around the Sarb easing monetary policy in 2020 should increase, should the data mirror market expectations, and the rand is poised to appreciate against the dollar,” Otunuga said.
Source: iol.co.za
