We should not be too sure that the repo rate will not increase again soon, economists say, with a November hike not unlikely.
After the Monetary Policy Committee left the repo rate unchanged on 3.5% on Thursday, economists say that if it does not increase by 25 basis points in November, it is likely that it will happen early in 2022. Prof. Jannie Rossouw from the Wits Business School says he expected that it would remain the same and that inflation will also stabilise.
“Consumers must remember that it is a forward-looking policy and that the price of goods increases faster than the price of services, but price increases for goods is more noticeable.” “However, there are many other items in the basket used to determine inflation and everything is under control. As long as the MPC is comfortable with the inflation rate, it will not touch the repo rate. People must remember that the repo rate is not there to punish consumers.”
However, Oxford Economics Africa says the call for the last meeting in November could be more debatable, depending on local and international factors. “Nevertheless, should the US Fed start to taper its bond-buying programme earlier than expected, maybe as early as November, and commodity prices start to decline, we could see the MPC pulling the trigger at its last meeting in November and raise rates by 25 bps.”Carmen Nel, economist and macro strategist at Matrix Fund Managers says the statement’s tone was quite mixed.
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