Some economists believe Reserve Bank’s MPC will make another repo rate cut

The July meeting comes amid heightened external risks and global policy uncertainty pushed up by the looming US tariffs on all the country’s trading partners.

Some economists believe the South African Reserve Bank (SARB)’s Monetary Policy Committee (MPC) will make another repo rate cut when the central bank decides on its benchmark rate on Thursday.

The July meeting comes amid heightened external risks and global policy uncertainty pushed up by the looming United States (US) tariffs on all the country’s trading partners.

Despite that and the slight uptick in the June inflation print, analysts said there’s room for softer interest rates for consumers buckling under debt.

Inflation inched higher from 2.8% in May to 3% in June, still comfortably below the SARB’s 4.5% midpoint target.

Only warning of the impact of food prices, inflation remains tame and the risks to the outlook relatively balanced, economists at Nedbank predict a 25-basis-point cut.

They believe the sources of upward pressure remained few and isolated.

An economist at Sanlam Investments, Patrick Buthelezi, said that while there are risks to inflation in the second half of the year due to food and administered prices, he said the country doesn’t have an inflation problem.

“Overall, we expect inflation to remain within the Reserve Bank’s target of 3 and 6%.”

The current repo rate stands at 7.25% and the prime rate at 10.75%, which is still some 100 basis points higher compared to the pre-pandemic rate in January 2020.