Rate cut of 100bps expected

Johannesburg - The consensus forecast according to I-Net Bridge's Econometer is that the repo rate could be cut by 100 basis points next week and then another 100 in April, with the total rate cutting cycle amounting to 450 basis points when it is over.

Only one of the nine leading economists surveyed expects a higher cut than 100 basis points - of 150 basis points - next week. The rest see it at 100 on the nose.

Come April 30, seven of the eight economists surveyed on that measure expect a cut of 100 basis points, with one expecting a cut of "at least" 50 basis points.

According to eight economists surveyed, the total rate-cutting cycle that began in December last year should amount to 450 basis points, taking the repo rate to a bottom of 7.5%.

South African Reserve Bank (SARB) Governor, Tito Mboweni, told I-Net Bridge on Wednesday that there is a need for more frequent Monetary Policy Committee (MPC) meetings in order to take account of the rapid changes taking place every day in the global economic and financial environment, and their impact on South Africa's economy and its outlook for inflation, growth and jobs.

This followed news that the MPC will meet on March 23 and 24 ahead of the previously scheduled April 15 and 16, and then at close to monthly intervals thereafter.

Mboweni said that the MPC had been debating for some time the need for more regular meetings.

Interestingly, Mboweni said on February 5 when announcing a 100 basis point cut that he had recommended a cut of 200 basis points to the committee after returning from the World Economic Forum in Davos.

"They probably thought it was the snow, but I went in there all guns blazing," he said.

Mboweni also sketched a bleak picture of the economy, saying there will be a "rough patch" over the next two, three or four years, and had a stern message for politicians who were telling their supporters otherwise. This comes just ahead of South Africa's own election on April 22.

- I-Net Bridge