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5.5% Repo Rates Likely to Stay

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The Reserve Bank’s Monetary Policy Committee (MPC) began its two-day meeting with economists on Tuesday 10 May predicting that the repo rate will remain unchanged at 5.5 percent.

“Nedbank expects the MPC to keep rates unchanged at 5.5 percent which will keep prime rate at 9 percent,” said Nedbank economists.

Standard Bank senior economist Dr Johan Botha said oil prices had fallen in the last couple of days with reports that it will rise again. “The volatility is a concern making policy quite difficult,” said Botha on Tuesday.

At the MPC’s last meeting in March Governor Gill Marcus said that the bank would keep a watch on rising food prices.

“Food prices are still rising therefore I don’t think the MPC will change its view also given the exchange rate which is volatile and strong. The outcome would be that the central bank will watch developments closely,” explained Botha.  Standard Bank expects a rate hike in 2012.

In November, the Reserve Bank slashed the repo rate by 50 basis points reducing it to its lowest in 30 years. Since December 2008, the repo rate has been cut by 650 basis points.

The meeting is the third one since the year kicked off. The MPC will announce its decision on Thursday afternoon. – BuaNews

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Alan Straton

Chief Cook, Bottle Washer and Broom Mechanic at MyPE
Passionate about Port Elizabeth and definitely NOT packing for Perth. Alan's ethos is epitomised in the words of Nelson Mandela; "I have fought against white domination and I have fought against black domination. I have cherished the idea of a democratic and free society. If need be, it is an ideal for which I am prepared to die." See more articles by Alan.