Better than expected inflation outcomes domestically and globally back the case for the central bank to cut the repo rate to 8%, economists said
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“The rand strengthened significantly over August and held up relatively well in early September,” it said. “They can carry on cutting at every meeting next year, with the aim of getting the interest rate down to the repo rate down to 7%. Given that the repo rate is 8.25%, that would give you 125 basis points of cuts, and you would then be at a kind of a neutral interest rate, and you would then be looking to keep rates on hold and judge whether you need to do more from that point.”
“Headline inflation is forecast to remain at 4.6% in August before cooling to end the year at around 4.1%. Altogether, we forecast inflation to average 4.8% in 2024, 4.3% in 2025 and 4.4% in 2026,” the bank said in a note.
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