No interest rate cut expected despite inflation dip, say economists

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South African Reserve Bank Governor Lesetja Kganyago.
South African Reserve Bank Governor Lesetja Kganyago.
Gallo Images/Business Day/Freddy Mavunda

The SA Reserve Bank's (SARB) Monetary Policy Committee (MPC) is expected to keep the repo rate on hold at 3.5% this week, despite lower-than-expected inflation print for February.

On Wednesday, Stats SA released consumer inflation data for February, which decelerated to 2.9% on a year-on-year basis. This is below SARB's 3% to 6% target range. It is also the lowest rate recorded since the low of 2.2% recorded in June 2020.

Hugo Pienaar, chief economist of the Bureau for Economic Research (BER), said that the MPC's deliberations this week probably won't put that much focus on the February data release, but rather consider the outlook for inflation beyond February and over the forecast period. "From a monetary policy perspective, the February number does not have a big impact," said Pienaar.

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