News24
17 Jan 2020, 02:44 GMT+10
Two months can be a long time in central banking, and if you are the South African Reserve Bank, it can mean bringing an interest rate cut forward and a move to signaling even more.
The Reserve Bank's monetary policy committee unexpectedly cut its key rate to 6.25% from 6.5% on Thursday, a move predicted by only three of the 19 economists surveyed by Bloomberg.
These charts show how the data that influenced the decision have changed since the November MPC meeting.
The Reserve Bank has made it clear it wants to anchor inflation expectations at the midpoint of its target range of 3% to 6% and this may be in reach now. While the MPC predicted in November that price growth would exceed 5% in 2020, it now sees the rate settling at the 4.5% mark from the third quarter of next year. The risks to the outlook are balanced, Governor Lesetja Kganyago said.
At the beginning of 2019, the Reserve Bank projected economic growth of 1.7% for the year. That has now been trimmed to just 0.4%. GDP growth hasn't exceeded 2% since 2013 and the MPC has now joined the National Treasury in forecasting that expansion won't get back to that level by 2022. The outlook for the economy is fragile and the risks to the estimates published on Thursday are on the downside, Kganyago said.
The three MPC members who voted to hold the rate in November changed their position and joined the other two panel members how favored a 25 basis-point cut. The Reserve Bank doesn't publish minutes of its meetings or disclose voting by each individual member.
In November, the Reserve Bank quarterly projection model priced in only one 25 basis-point cut in the third quarter of this year. Kganyago said at the time this could change in either direction. The updated implied path of policy rates over the forecast period indicated two cuts of 25 basis points each in the first and fourth quarters of 2020, Kganyago said on Thursday.
Get a daily dose of Los Angeles Herald news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Los Angeles Herald.
More InformationVENICE, Italy: Over the weekend, hundreds of protesters marched through the narrow streets of Venice to voice their opposition to billionaire...
PARIS, France: France is taking stronger steps to reduce smoking. A new health rule announced on Saturday will soon ban smoking in...
WASHINGTON, DC - U.S. President Donald Trump on Tuesday claimed Elon Musk's success has been built on government subsidies. Without...
EVERGLADES, Florida: Over the weekend, a diverse coalition of environmental activists, Native American leaders, and residents gathered...
BEIJING, China: China's national soccer team may struggle to stir excitement, but its humanoid robots are drawing cheers — and not...
]LONDON, U.K.: A World Health Organization (WHO) expert group investigating the origins of the COVID-19 pandemic released its final...
WASHINGTON, DC - U.S. President Donald Trump on Tuesday claimed Elon Musk's success has been built on government subsidies. Without...
SANTA CLARA, California: Executives at Nvidia have quietly been cashing in on the AI frenzy. According to a report by the Financial...
Vancouver, Canada: A high-stakes legal showdown is brewing in the world of athleisure. Lululemon, the Canadian brand known for its...
DOVER, Delaware: California Governor Gavin Newsom has taken legal aim at Fox News, accusing the network of deliberately distorting...
SAN FRANCISCO, California: Across the U.S., a growing number of people are taking obesity treatment into their own hands — literally....
SAN FRANCISCO, California: Under pressure from European regulators, Apple has revamped its App Store policies in the EU, introducing...