The Monetary Policy Committee meets again next Thursday to decide if the repo rate can be cut, which will bring some relief for consumers.
Economists expect another repo rate cut of 25 basis points next week when the Monetary Policy Committee of the Reserve Bank meets for the first time this year. However, they have trimmed their expectations for more cuts this year.
“Still, we concede the growing risk of fewer rate cuts. The highly uncertain external environment means that the Sarb will continue to strike a hawkish note. Next week’s Monetary Policy Committee meeting should set the tone for the year ahead. “However, the Sarb will be more cautious due to the uncertain impact of the likely change in US economic policies. We expect the Sarb to cut interest rates by 25 basis points next week, followed by another cut in March, leaving the repo rate and 7.25% and the prime rate at 10.75%.”
“The fuel price is set to increase for a fourth consecutive month in February. Indeed, as financial markets have started to price fewer rate cuts by the US Fed, traders have now adjusted their expectations to just one 25 basis point cut this year, from three expected earlier. She points out that expectations for interest rate cuts in the US have moderated, from three 25 basis points cuts to one definite 25 basis points drop, while there is currently just under a 70% chance of a second repo rate cut for this year.
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