By Ragheema Mclean
Economists and analysts widely anticipate the South African Reserve Bank (SARB) will lower interest rates by 25 basis points this afternoon (19 September), but some believe a more significant cut could be possible.
Recent data from Statistics South Africa shows inflation fell to 4.6% year-on-year in July, down from 5.1% in June. This marks the lowest inflation rate since April 2021.
The drop is mainly attributed to lower annual inflation rates in transport, housing, and restaurants, while food and beverage prices saw increases.
Speaking on VOC Breakfast, independent economist Ulrich Joubert suggested a larger interest rate cut could be on the horizon.
“There are two factors to consider: the easing of inflation and the possibility of a 50-basis point interest rate cut,” said Joubert.
“Lower inflation is always good news, and there’s a chance it could come down further in the coming months.”
Joubert also highlighted the volatility of food prices, noting that recent fluctuations, such as the impact of black frost on potato crops in Limpopo, have affected food costs.
Globally, many economies have already begun cutting interest rates, and South Africa’s central bank has taken a more cautious approach, keeping the domestic rate at 8.25% since May 2023.
“If food and fuel prices soften, we could see inflation stay within the Reserve Bank’s target of 4.5%, which would help lower the average inflation rate for the year,” Joubert explained.
Listen to the full interview below:
VOC News
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