Economists say a cut in interest rate would not have had a significant impact on growth. They reacted to the Reserve Bank’s Monetary Policy Committee’s decision to keep the repo rate unchanged at 6.75 % . However, Reserve Bank Governor Lesetja Kganyago says the bank could resume with its monetary easing in the first quarter of next year.

PWC’s Economist Lullu Krugel says a cut would only bring marginal relief to indebted consumers.

“It could be a breather for consumers, I am thinking that it probably won’t have much impact because it will be a small cut of about 25 basis points so I think most people will just say thank goodness it is a little easier to pay my debt rather than to say I now have extra cash. I think the SARB is keeping that in mind, they realise that it will have a limited impact on growth, it won’t be a massive stimulus.  “

The Reserve Bank is forecasting a contraction in Gross Domestic Product in the first quarter of this year largely due to electricity supply constraints and a strike in the gold mining sector. The bank has again lowered its 2019 growth forecast from 1.3 % to 1% .  Kganyago has raised concerns about the impact of the higher international oil price and electricity supply constraints on inflation.

He says the bank expects to cut the repo rate next year. “The implied path of policy rates generated by the quarterly projection model is for a one cut of 15 basis points to the repo rate by end of first quarter of 2020. As emphasised previously there remains a guide which could change from meeting to meeting in response to new developments and changing risks. “