Consumers to stretch their Rands as economy slows

0
24

Jacques Celliers | CEO | First National Bank| mail me |


 

 

 

 

 

 

 


Mamello Matikinca-Ngwenya | Chief Economist | First National Bank | mail me |


The Reserve Bank’s decision to hold rates, even with the recent instability in stock and currency markets, will help consumers to plan ahead when managing their finances.

Post our peaceful national election and assembling a new Parliament, we believe that government in partnership with business should prioritise policy implementation to grow our economy. With unemployment at more than 27%, the public and private sectors have a collective responsibility to restore confidence in our economy. The SARB’s consistency in implementing its primary mandate to achieve and maintain price stability is already a major head-start for our economic revival.

The SARB’s decision to keep the repo rate unchanged is in line with ours and the market’s expectation. While the SARB may continue to view monetary policy as being accommodative, we do not dismiss the possibility of a repo rate cut discussion being brought back to the table. We remain concerned about the persistently weak domestic growth outlook and are of the view that the expected underperformance in GDP in 1Q will require a notable rebound in the coming quarters for growth to be stronger than the 0.8% recorded last year.

As such, the widening of the output gap suggests that demand in the economy should remain weak. We expect inflation to remain below 5% in 2019 and 2020. Further downside surprises to the inflation outlook should provide the impetus needed for the bank to reconsider the possibility of rates cuts. Further, monetary policy globally remains accommodative.


 

Advertisement

LEAVE A REPLY

Please enter your comment!
Please enter your name here

For security, use of Google's reCAPTCHA service is required which is subject to the Google Privacy Policy and Terms of Use.

I agree to these terms.