The MPC will announce its decision on 23 July. Economic growth under pressure further reduces the chances that the bank will raise rates.
At the same time, however, inflation is edging higher, placing the Bank in a dilemma, after it started hiking rates in January last year. This is the only likely consideration that would make a hike a small possibility.
Investec economist Annabel Bishop on Thursday said the Reserve Bank had continuously communicated that interest rates were likely to rise this year. "We continue to expect a 25 basis point hike next week," she said.
However, Nedbank economist Dennis Dykes said it was increasingly unlikely that the Bank would hike next week. "However, the US Fed is likely to hike rates at its September meeting."
That might move the hand of the Bank to wait until then before hiking. "The Bank could time the move when counterpart Janet Yellen does the first step in the US," UFX.com MD Dennis de Jong said. "Retail sales were very poor, in line with recent manufacturing data," he said.
Retail sales growth dropped to 2.4% year on year, lower than the 3.4% recorded in April. On a monthly basis, retail sales rose by a seasonally adjusted 0.1%, keeping the three-month growth rate at a weak 0.8% compared with the previous three months.
Nedbank predicted annual growth in retail sales to come in at a higher 2.7%, with Investec having expected 2.5%.
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