This comes as the SA Reserve Bank (SARB) prepares to announce its latest decision on the repo rate this afternoon.

“A cut would free up disposable income and support spending, which the economy needs right now. From that perspective, I’d lean toward a modest reduction,” said Frank Blackmore, Chief Economist at KPMG SA.

With inflation easing to between 2.7% and 2.8%, well below the SARB’s 3% to 6% target range and the lowest level in over a year, expectations are mounting that the central bank might trim the repo rate by 25 basis points.

However, the decision is far from clear-cut. While low inflation presents an opportunity for easing, the Monetary Policy Committee must weigh ongoing global uncertainties, potential geopolitical tensions, and domestic challenges such as a volatile Rand and structural weaknesses.

“The Reserve Bank isn’t just setting rates for today. It has to look 12 to 18 months ahead,” Blackmore explained. “Risks like potential United States trade tariffs or diplomatic tensions could feed back into the local economy through currency pressures and inflation.”

Still, many argue that the current economic environment supports a more growth-oriented stance. SA continues to battle weak business confidence, fiscal constraints, and the drag of persistent load-shedding, all of which limit the effectiveness of monetary policy alone.

Blackmore highlighted the importance of listening closely to the SARB’s tone. “Beyond the actual decision, what’s said about risks, growth, and inflation expectations will offer key insights into the direction of policy for the rest of the year.”

--ChannelAfrica--