South African Bank Poised to Take It Easy on Rates by Next Year – What the Experts Think
Hey there! So, here’s the scoop from Johannesburg. The bigwigs at the South African Reserve Bank are probably gonna keep things steady with their repo rate this year. But hold on to your hats! They’re gearing up to slice it a bit, starting from the top of 2024. Yep, a teeny 25 basis points cut every few months, as the inflation chillaxing closer to their sweet spot. That’s according to a recent Reuters poll, by the way.
Now, if this pans out, the South African Reserve Bank will be hopping onto the bandwagon with other emerging markets. Many of them have started snipping rates or are planning to ease up after putting the brakes on inflation. And guess what? They started this whole shebang way before the big boys in developed countries.
This fresh poll from last week gave us the 411. Out of 20 finance gurus, 17 think the repo rate will stay the same next month, sitting pretty at 8.25%. The rest? Two are betting on a tiny September jump, and another one’s feeling a bit more daring with a bigger leap.
And come next year? Well, there’s a good chance the Reserve Bank will start trimming rates by the first few months. And, you know, rinse and repeat for the rest of the year.
Annabel Bishop, the head honcho economist over at Investec, chimed in. She thinks the US might be in for a cut too. The South African repo rate? She’s eyeing an early 2024 adjustment. She pointed out that if inflation keeps its cool, we might just see friendlier rates next year. Great news for families! But, here’s the twist: Mother Nature and El Nino could shake things up, especially with our grocery bills.
Across the pond, another survey hinted that the U.S. Federal Reserve is probably done hiking rates. Most experts think they’ll just hang tight, maybe until spring.
Down in South Africa? They’re looking forward to a cooler inflation climate. The forecast? A dip from 5.9% this year to a cooler 4.9% next year, and then a nippy 4.6% by 2025. The bank’s dream zone? Between 3% and 6%.
On the growth front, it’s been a bit of a rollercoaster. We might see a slight 0.3% growth this year and maybe a 1.2% in 2024. Hugo Pienaar, the main man at the Bureau for Economic Research, thinks the big boost will come from more investment in the green energy sector. Unfortunately, Eskom, the power company, has been a party pooper. With daily blackouts and heaps of debt, they’re juggling between fixing old stuff and investing in the new.
For more juicy economic tidbits from Reuters, check this out!
I hope that was a fun ride for you! Catch you later! 😊
