All eyes on the Reserve Bank for first rate decision of 2019

accreditation

In general, it seems economists are of the opinion that the SA Reserve Bank (SARB) will likely keep the repo rate unchanged this time.

SARB's Monetary Policy Committee (MPC) has its first meeting for 2019 this week and governor Lesetja Kganyago is set to announce the rates decision at 15:00 on Thursday.

At its previous meeting in November 2018, the MPC announced a 25-basis points increase in the repo rate. This was the first increase since March 2016 and brought the repo rate and prime lending rates to 6.75% and 10.25%, respectively.

The repo rate is the benchmark interest rate at which the central bank lends money to other banks. Changes in the repo rate affect the prime lending rate, which is the rate banks use as a starting point to calculate interest rates for their clients.

PwC said earlier this week that the central bank was unlikely to raise rates again this time due to fears around the global economy dampening oil prices and offering a petrol price reprieve, "US equities jitters" that may slow down the pace of the US Fed's monetary policy tightening, and the SA economy's weak demand pressures.

PwC noted, however, that the SARB had signalled at the beginning of the interest rate hiking cycle in November that it may raise rates three times by 25 basis points each before the end of 2020.

Investec economist Annabel Bishop, in a note to clients, also indicated that she expects interest rates would remain unchanged for the first half of 2019.

"Contrary to the timing of the last MPC meeting in November 2018, the start of 2019 has seen risk-aversion abate somewhat in global markets as commentary from US monetary authorities has become less hawkish," she said.

Domestically, risks for SA abound, said Bishop, ranging from fiscal performance and the threat of credit rating downgrades, to the upcoming national election. 

Nedbank Corporate and Investment Banking also said it expected the central bank to keep interest rates on hold on Thursday.

"We see marginally lower headline inflation in 2019, but believe the bias is still for a hike by the SARB later this year," it said in a statement.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
Rand - Dollar
14.92
-1.1%
Rand - Pound
20.40
+0.2%
Rand - Euro
17.48
+0.3%
Rand - Aus dollar
10.83
+0.2%
Rand - Yen
0.13
+0.2%
Gold
1,750.56
0.0%
Silver
22.43
0.0%
Palladium
1,974.50
0.0%
Platinum
987.00
0.0%
Brent Crude
78.09
+1.1%
Top 40
57,643
0.0%
All Share
64,049
0.0%
Resource 10
57,254
0.0%
Industrial 25
82,879
0.0%
Financial 15
14,316
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Voting Booth
What potential restrictions on unvaccinated South Africans may make the biggest difference to public health, the economy?
Please select an option Oops! Something went wrong, please try again later.
Results
Limited access to restaurants and bars
11% - 134 votes
Limited access to shopping centres
15% - 176 votes
Limited access to live events, including sport matches and festivals
26% - 309 votes
Workplace vaccine mandates
48% - 577 votes
Vote