Reserve Bank set to cut repo rate by 25bps as inflation eases

It is widely expected that the Reserve Bank will cut the repo rate by 25 basis points when it makes its announcement this afternoon.

This is as inflation has continued to surprise on the downside, a trend expected to remain until the second half of this year.

Consumer inflation was 3% in December, up from 2.9% in November, comfortably below the midpoint of the Reserve Bank’s target range of 3 to 6%.

The Reserve Bank has cut rates twice by 25 basis points each time in the past year, bringing some relief to indebted consumers.

At its last Monetary Policy Committee meeting in November, the Reserve Bank raised concerns about a challenging global economic landscape. This creates conditions for a shallow rate-cutting cycle.

Economists expect the central bank to cut rates this time but keep rates unchanged at its March sitting.

It’s expected inflation will remain subdued over the medium term, with the Reserve Bank forecasting an average of 4.5% this year, from an annual average of 4.4% last year.

South Africans hope for interest rate cut: