Consumers with mountains of debt are holding their breath to hear what the Reserve Bank will decide about the repo rate.
The Reserve Bank will be making a policy error if it does not cut the repo rate on Thursday after the meeting of the Monetary Policy Committee, an economist says. The oil price and the petrol price have decreased, and inflation is expected to trend lower in the coming months, while the Rand is also stronger, leaving no excuse for the Reserve Bank not to cut the repo rate.
Elize Kruger, an independent economist, says since the previous Monetary Policy Committee meeting, the oil price has tanked from $84.8 per barrel to around $71 per barrel now, while the Rand exchange rate also trended stronger, currently around R17.93/$ compared to R18.18 at the time of the previous meeting.
“In addition to these price cuts, the current over-recovery at the pumps suggests that further cuts of at least R1 per litre in both petrol and diesel prices are on the cards for early October.”Headline inflation is forecast to moderate notably in the upcoming 12 months, Kruger says. Average headline inflation was 5.3% in the first half of the year, while the forecast average for the second half of 2024 is 3.9%.
Inflation is forecast at 4.5% in August compared to 4.6% in July. The inflation rate for August will be announced on Wednesday.
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