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Economists split over repo rate increase

The South African Reserve Bank's (Sarb's) Monetary Policy Committee (MPC) has a lot to ponder this week at its last scheduled meeting of 2021 as inflation pressures build while the economy's performance remains stunted with unemployment at appalling levels

15 Nov 2021

Source: ©bryljaev 123rf

The jury is certainly out on its next move. The repo rate is currently at a historic low of 3.5%, and the prime lending rate at 7%, after Sarb aggressively slashed 300 basis points last year in the face of the economic upheaval sparked by the pandemic and the lockdowns to contain it.

Finder.com, a global financial platform, said its panel of 20 economists is almost split down the middle on the issue, with 55% expecting the MPC to raise rates this week and 45% forecasting a hold.

“The panel flips on what the MPC should do, with 45% recommending an increase and 55% a rate hold,” it said. Looking further down the road, 30% see the first rate hike coming early next year and the rest expect such a move late in 2022 or 2023.

Source: Daily Maverick

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