Interest rates likely unchanged until late 2019 – Nedbank

Interest rates in South Africa will remain unchanged into late 2019, Nedbank Group’s Economic Unit forecasted on Monday.

According to Nedbank, rising inflation and concerns over tightening policy globally will probably keep interest rates in South Africa on hold in the short term until these trends become clearer.

The bank commented on Monday that growth in private sector credit extension rose to 6% year-on-year in March, slightly higher than the markets’ forecast of 5.7% and up on February’s 5.7%.

Other loans and advances — made up mostly of loans to corporates — again drove the headline figure, the bank said.

Money supply growth eased to 6.4% year-on-year from 6.9% and was lower than the consensus forecast of 7%.

According to Nedbank, credit demand is likely to improve gradually in 2018 on better economic growth and confidence, with modestly lower interest rates and softer inflation helping affordability.

“Credit demand remains modest despite the recent spike in both business and consumer confidence following the positive political changes in December,” said Nedbank.

“Even though credit growth will improve as the economy picks up in the coming months, helped by a favourable global economic climate and better local conditions, this will not be by enough to concern the monetary authorities.

Interest rate

The Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB) cut interest rates by 25 basis points at the end on March this year. The repo rate is now 6.5% and the prime lending rate 10%.

The last time before that that SARB cut the repo rate was in July 2017, when the MPC reduced the rate by 25 basis points from 7% to 6.75%.

SARB governor Lesetja Kganyago said at the time that the inflation forecast of SARB has shown a moderate improvement and indications are that a low point of the inflation cycle had been reached.

The main changes in the forecast relate to the exchange rate, among other things, he said and cautioned that an international trade war could also push inflation expectations higher.

He listed as a key risk to the rand the possible fiscal tightening in the US. — Fin24

We make it make sense

If this story helped you navigate your world, subscribe to the M&G today for just R30 for the first three months

Subscribers get access to all our best journalism, subscriber-only newsletters, events and a weekly cryptic crossword.”

Carin Smith
Carin Smith
A business journalist at Fin24.com.

Related stories

WELCOME TO YOUR M&G

Already a subscriber? Sign in here

Advertising

Latest stories

Four ways to help South Africa’s young people find jobs...

We need to move away from imposing ‘solutions’ on young people to seeing them as active partners

‘Justice for Marikana will only be served if we see...

The mineworker union’s Joseph Mathunjwa spoke at the ten-year anniversary of the massacre

US conduct regarding Taiwan evinces a dangerous and ignorant strain...

It underestimates the role of face-saving, which is central to Chinese culture, and the country’s priorities, such as attaining the Chinese Dream

Eskom: Stage two load-shedding tonight

Continued blackouts highly likely on Wednesday and Thursday, the energy entity added
Advertising

press releases

Loading latest Press Releases…
×