SA Reserve Bank Sticks To Script On Rates, Growth Outlook

THEBE MABANGA

THE South African Reserve Bank Monetary Policy Committee (MPC) stuck to market expectations and cut the repo rate by 25 basis points, taking it to 3.5 %.

Three members preferred a cut of 25 basis points and two preferred to keep rates on hold.

Raymond Parsons, Professor at the North West University Business School, said “a 25 basis points cut is positive but a 50 basis points cut is better.”

The bank also maintained its gloomy, if slightly optimistic, outlook for growth. The bank now expects GDP in 2020 to contract by 7.3%, compared to the 7 % contraction it expected in May. Some private sector economists forecast a contraction of around 10%.  

“Even as the lockdown is relaxed in coming months, for the year as a whole, investment, exports and imports are expected to decline sharply. Job losses are also expected to rise further,” the MPC