Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

South Africa's Reserve Bank expected to cut rates on July 18: Reuters poll

EconomyJul 11, 2019 02:11AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
South Africa's Reserve Bank expected to cut rates on July 18: Reuters poll

By Vuyani Ndaba

JOHANNESBURG (Reuters) - The South African Reserve Bank is likely to cut interest rates by a quarter of a percent next week as a slowdown in the economy during the first three months of the year could turn worse if left unchecked, a Reuters poll showed on Thursday.

Twenty-four of 30 economists in the survey taken over the past three days said the repo rate would be cut by 25 basis points to 6.50% on July 18. Two expected a cut of 50 basis points. The other four said rates would be left unchanged.

"Conditions in South Africa have been shifting in favor of a rate cut for some time," said Razia Khan, chief economist for Africa and Middle East at Standard Chartered (LON:STAN) Bank.

Economists assigned a median 60% probability rates would be cut on July 18, even though inflation is expected to average 4.5% this year, the center of the Bank's 3% to 6% target range.

The median forecast for economic growth was 0.7% for this year. That is 0.1 percentage point higher than last month's median, when economists lowered their forecasts because of a quarterly 3.2% contraction when the year began.

South Africa's private sector has been shedding jobs recently, including in the interest-rate-sensitive banking industry, where banks have already cut or announced plans to cut staffing.

Khan -- who predicted a 50-basis-point cut next week -- said the daily drip-feed of retrenchment headlines should, in theory, make little difference to the SARB because it is the economic outlook that matters to it.

"The reality, however, is that it does impact psychology and people expect – especially with inflation well-behaved – that the SARB should be in a position to react to their perception that the economy is weak," Khan said.

Senior officials in the ruling African National Congress party have argued in recent months over whether the Reserve Bank's mandate should be broadened to explicitly include job creation and economic growth alongside price stability.

Joblessness rose to 27.6% in the first quarter, official data showed in May, underscoring the task faced by President Cyril Ramaphosa after the ANC, his party, won re-election last month.

An expanded category of unemployment, including people who have stopped looking for work, rose to 38% in the first quarter from 37% in the previous quarter.

This trend is also affecting services. Local banks have been automating their services to clients, cutting the number of face-to-face interactions and digitizing services.

Khan said monetary policy will not be able to reverse structural trends like automation, nor should it even try to.

However, economists said growth would accelerate to 1.4% next year, in line with last month's poll.

"Looser policy will help to boost growth in South Africa in 2020," said John Ashbourne, a senior economist at Capital Economics.

Still, gross fixed capital investment continues to dampen the outlook for growth. One economist predicted a 0.2 economic contraction for the full year as they don't expect private-public infrastructure spending to show up soon.

(Additional polling by Khushboo Mittal in Bengaluru, editing by Larry King) OLUSECON Reuters US Online Report Economy 20190711T060815+0000

South Africa's Reserve Bank expected to cut rates on July 18: Reuters poll
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email