MONEY
15/01/2018 08:26 SAST | Updated 15/01/2018 08:26 SAST

Repo Rate Expected To Remain Unchanged This Week

The SARB's monetary committee will meet on Thursday.

South Africa's Reserve Bank Governor Lesetja Kganyago speaks during a television interview at the World Economic Forum on Africa 2017 meeting in Durban, South Africa, May 4, 2017. REUTERS/Rogan Ward
Rogan Ward / Reuters
South Africa's Reserve Bank Governor Lesetja Kganyago speaks during a television interview at the World Economic Forum on Africa 2017 meeting in Durban, South Africa, May 4, 2017. REUTERS/Rogan Ward

Interest rates are expected to remain unchanged when the South African Reserve Bank's (SARB) Monetary Policy Committee (MPC) meets on Thursday, according to Business Day.

Most economists reportedly expect the repo rate to remain unchanged at 6.75%.

Investec economist Kamilla Kaplan told Business Day that this is because the rand remains vulnerable to fiscal and sovereign credit ratings changes in the first quarter of 2018. Moody's is reportedly likely to review South Africa's investment grade after the 2018 budget statement.

Nedbank economist Nicky Weimar told Business Day that the rand's continued vulnerability will probably mean that interest rates will remain unchanged for the rest of the year.

FNB chief economist Mamello Matikinca told Fin24 that the MPC meeting will probably see a "more balanced tone with a slight bias toward the upside inflationary risks".

"Despite inflation being well contained and a strengthening currency, we believe there are too many risks over the medium term to spur the committee to move in either direction. Firstly, the oil price has surged, presenting upside risk to the inflation profile. Secondly, the February budget could deliver significant tax hikes and expenditure cuts in an effort to fund free higher education and provide fiscal support for ailing state-owned enterprises (SOEs), all of which need to be budget neutral," she reportedly said.

The oil price reached a three year high on Monday, SABC News reported, despite a rise in US and Canadian drilling which points to higher outputs.

The SARB left the repo rate unchanged at 6.75% in November last year, according to Eyewitness News (EWN). SARB governor Lesetja Kganyago said at the time that this was in light of the uncertainty prevailing in the economy.