Lower inflation could have ‘positive impact’ on repo rate
Economist Dawie Roodt says he
anticipates the latest inflation figures will positively impact Thursday’s repo
rate decision.
The South African Reserve Bank is expected to announce its decision on Thursday afternoon.
Annual headline inflation slowed to 5.4 percent in June from 6.3% the previous month.
Stats SA says it's the lowest level in 20 months.
Roodt, the chief economist at the Efficient Group, says even though inflation is now within target - we must not expect the central bank to suddenly decrease the repo rate.
READ: Inflation slows significantly ahead of repo announcement
"Other variables are also important, like, for example, future inflation and future inflation expectations, because they put everything together and they still think the Reserve Bank increase the interest rate. So the repo rate is likely to increase again by the monetary policy committee.
“I think there could have been two more increases in the repo rate. I actually thought previously that it could've been another 25 basis points increases but because of inflation coming now lower than expected, I think it can only be necessary for the Reserve Bank to increase once more."
