SARB’s interest rate pause provides relief, but MPC will remain alert to inflation risks, says FNB
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GUEST – Mamello Matikinca-Ngwenya - FNB Chief Economist
Following the South African Reserve Bank’s (SARB) decision to keep its benchmark repo rate unchanged, FNB will keep its prime rate at current levels and will review this position after the next SARB MPC meeting in November.
FNB Chief Economist Mamello Matikinca-Ngwenya says, “The MPC left interest rates unchanged for the second consecutive meeting, supporting our and the consensus view that the 50bps hike implemented in May was the final lift for the current cycle. This is consistent with slower headline inflation, which has supported a softening in inflation expectations while wage growth expectations remain subdued. Therefore, tighter lending conditions and weak demand should at least assist with containing demand-driven inflation, even as the headline reflects some supply-side pressures.
Following the South African Reserve Bank’s (SARB) decision to keep its benchmark repo rate unchanged, FNB will keep its prime rate at current levels and will review this position after the next SARB MPC meeting in November.
FNB Chief Economist Mamello Matikinca-Ngwenya says, “The MPC left interest rates unchanged for the second consecutive meeting, supporting our and the consensus view that the 50bps hike implemented in May was the final lift for the current cycle. This is consistent with slower headline inflation, which has supported a softening in inflation expectations while wage growth expectations remain subdued. Therefore, tighter lending conditions and weak demand should at least assist with containing demand-driven inflation, even as the headline reflects some supply-side pressures.