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Johannesburg – More factors are pointing to an interest rate cut at the November meeting of the SA Reserve Bank's monetary policy committee, Absa Capital Research economists said on Tuesday.
These include third-quarter inflation coming in lower than the bank had anticipated, a continuing decline in inflation expectations, weak economic recovery and rand strength.
Inflation reached 3.4% in the third quarter of 2010.
The economists said that this figure lowered the starting point for the inflation trajectory, and that a further surprise on the downside was likely in the fourth quarter.
This was despite a petrol price increase in October and November.
The bank has already reduced the repo rate, currently at 6%, by 600 basis points since December 2008.
"We think the risks for further rate cuts in the first few months of 2011 are balances as the SA Reserve Bank's decisions will be considerably data-dependent," the economists said.
