Tag: oil price

Local investors should stay invested to reap strong future returns. An early decisive response to the COVID-19 threat should contain the spread of the virus in South Africa, but the economic repercussions in the short term will be costly. Local measures to contain the virus will add to an already weak economy and negative global impact.

The Monetary Policy Committee (MPC) unanimously decided to decrease the repo rate by 100 basis points to 5.25%. This somewhat unprecedented move was a direct result of the deterioration in economic conditions due to the COVID-19 pandemic experienced in South Africa and across the globe.

In the midst of a recessionary domestic economy, favourable inflation outlook and lower oil prices, the South African Reserve Bank (SARB) got room to cut interest rates by 100 basis points to 5.25%. A rate cut, downside inflation outlook and supportive rand boost agriculture rebound.

The global economy has been hit by five shocks as the coronavirus spread rapidly. This could not have been predicted, though with hindsight the market was initially much too complacent. The situation is so uncertain now that a strategy based on trying to predict the future is bound to get it wrong.