Johannesburg - The South African Reserve Bank's (Sarb) Monetary Policy Committee will (MPC) take centre stage in the coming week as it meets for its two-day rates meeting.
The nine-member committee starts meeting on Wednesday and will announce its decision on Thursday, July 22.
There are different views on whether or not the MPC will cut rates, given the mixed economic data that has come out since its last meeting in May.
Factors that may prevent a rate cut include inflation, which fell further in May, and better than expected retail sales, among others.
Manufacturing, the second biggest contributor to Gross Domestic Product, slowing in May and weak credit extension could support the case for a rate cut.
International developments could be the tiebreaker.
According to Brait economist Colen Garrow, not only developments in Europe will affect the bank's decision.
He said the recent bid by Japanese company Nippon Telegraph and Telephone to buy South African Dimension Data Holdings [JSE:DDT] was another factor.
"If the deal goes ahead, positive for capital inflows through the financial account of the BoP (Balance of Payments). It's also positive for the rand exchange rate," said Garrow.
Despite the positive and negative economic data, Garrow said in his view there was no strong economic evidence that supported a rate cut.
The Standard Bank Group Economics unit said while it believed that the rates decision could go either way, it saw the repurchase rate being kept on hold at 6.5% and prime remaining at 10.0%.
"The MPC may choose to err on the side of caution and keep rates unchanged, but will closely monitor the relevant aspects of the local and global economies over the next couple of months," said economists at Standard Bank, Johan Botha and Shireen Darmalingam.
The nine-member committee starts meeting on Wednesday and will announce its decision on Thursday, July 22.
There are different views on whether or not the MPC will cut rates, given the mixed economic data that has come out since its last meeting in May.
Factors that may prevent a rate cut include inflation, which fell further in May, and better than expected retail sales, among others.
Manufacturing, the second biggest contributor to Gross Domestic Product, slowing in May and weak credit extension could support the case for a rate cut.
International developments could be the tiebreaker.
According to Brait economist Colen Garrow, not only developments in Europe will affect the bank's decision.
He said the recent bid by Japanese company Nippon Telegraph and Telephone to buy South African Dimension Data Holdings [JSE:DDT] was another factor.
"If the deal goes ahead, positive for capital inflows through the financial account of the BoP (Balance of Payments). It's also positive for the rand exchange rate," said Garrow.
Despite the positive and negative economic data, Garrow said in his view there was no strong economic evidence that supported a rate cut.
The Standard Bank Group Economics unit said while it believed that the rates decision could go either way, it saw the repurchase rate being kept on hold at 6.5% and prime remaining at 10.0%.
"The MPC may choose to err on the side of caution and keep rates unchanged, but will closely monitor the relevant aspects of the local and global economies over the next couple of months," said economists at Standard Bank, Johan Botha and Shireen Darmalingam.