Economists split over inflation hike impact on SARB’s repo rate decision

Economists are divided over what the increase in inflation to 5.9% will mean for the decision on the repo rate.

Consumer price inflation (CPI) is nearing the upper end of the South African Reserve Bank’s (SARB) target band of 3% and 6%.

The central bank prefers to anchor inflation at the mid-point, using its monetary policy instruments – like the repo rate – to curb inflation.

The SARB is expected to announce the latest rates on Thursday, following a series of meetings by the Monetary Policy Committee (MPC) during the week.

Now the highest it’s been in five months, mainly driven up by food and transport inflation, the CPI for October came in higher than expected.

With inflation now on the upper limit of the central target range, economists warn it may still need to tighten its policy rates to slow inflation.

Chief economist at Investec Annabel Bishop said borrowing costs were still expected to remain higher for longer.

“Yes, there will be relief next year, but we can’t bank on it because we could see some risks come into the system.”

Nedbank economist Isaac Matshego says despite predictions that the repo rate will remain unchanged, the SARB will still err on the side of caution.

“We expect the MPC to maintain a hawkish tone.”

The repo rate sits at 8.25%, while the prime lending rate sits at 11.75%.

-EWN

In other news – Muvhango cast and crew go unpaid again

The popular SABC2 Tshivenda soapie, Muvhango, is facing ongoing financial issues, with reports indicating that actors and crew members have once again not received their payments. Despite being on a production break, individuals involved in the show claim that they have not been compensated for their work prior to the break.

According to inside sources, the production break follows the completion of Season 24, during which the cast and crew anticipated receiving their payments for work done in September. Read More