South African inflation is expected to be lower in 2020 than previously forecast...
JOHANNESBURG - South African inflation is expected to be lower in 2020 than previously forecast and the eventual reading could be lower still, a Reuters poll showed on Thursday, opening the door for the central bank to cut interest rates again during the year.
“We see the risks to the inflation forecasts as decidedly biased to the downside given weak global inflation and subdued local demand. Food inflation is also likely to remain tepid despite forecast below-average rainfall,” said Elna Moolman, economist at Standard Bank in Johannesburg. Still, the poll suggested the repo rate would be cut only once more this year - by 25 basis points to 6.0% - in July or September, after the bank surprised with a cut last month. It had been expected to hold off until May, after a Moody’s ratings review scheduled for March and a government budget in February.
Goldman Sachs had the most benign projection for this year’s average at 3.9% and argues that the country’s monetary policy stance is restricting economic growth.
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