No change expected in interest rates

All economists surveyed by I-Net Bridge expect no change in interest rates at the end of the two-day meeting of the South African Reserve Bank’s (SARB) monetary policy committee (MPC).

This is the 13th consecutive MPC meeting at which the majority of economists have forecast no cut in rates, but in August 2004 and April 2005, the SARB surprised the market by cutting rates by 50 basis points.

CPIX inflation (headline inflation excluding mortgage costs) has been below the midpoint of the SARB’s inflation target range of 3% to 6% year-on-year for 22 out of the past 27 releases.

The main reason for the no change in policy is the recent rise in the oil price, which should result in a rise in the retail petrol price in February.

In October, the MPC said the risks to the inflation outlook had increased due to the high and volatile international crude oil price and would not be ignored.


“The increased risk of possible pass-through leading to pronounced second-round effects on CPIX inflation must inform policy going forward,” the MPC said.

“Although there is no conclusive evidence of pass-through at present, and the monetary policy committee has not judged it necessary to change the monetary policy stance at this meeting, these developments will be closely monitored,” it added.

Food price inflation on an annual average basis was only 2,2% in 2005, compared with 2,3% in 2004 and 8,1% in 2003.

This helped the annual average CPIX to a record low of 3,9% in 2005 from 4,3% in 2004 and 6,8% in 2003. The CPIX has only been compiled since 1997. — I-Net Bridge

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

Helmo Preuss
Guest Author

Related stories

Advertising

Subscribers only

‘Terrorised’ family shines a light on traditional leadership for vulnerable...

The ambiguity between traditional and constitutional leadership has been exposed by the violent banishment of an Eastern Cape family

Matrics fail at critical subjects

The basic education minister talks of quality passes achieved by the class of 2020, but a closer look at the results tells a different story

More top stories

Zulu land body challenges audit outcome

Ingonyama Trust Board chairperson Jerome Ngwenya has challenged the audit process in the face of a series of unfavourable ratings

The many faces of Idi Amin

Was he a joke, an oaf, a hero, or the evil dictator the West loved to hate? Decades after his death, his legacy is still a puzzle.

Review: Volvo XC40 is never intimidating

When you’re asked to drive 400km on a business trip, it really helps if you don’t have to do it in an old skorokoro. In this Volvo, it becomes a road trip to rival others.

Aliens in Lagos: sci-fi novel Lagoon offers a bold new...

Nnedi Okorafor’s ‘Lagoon’ is an immersive reimagining of Nigerian society that transports us into a future where queerness is normalised
Advertising

press releases

Loading latest Press Releases…