MPC likely to keep rates unchanged

Tuesday, May 10, 2011

Pretoria - The Reserve Bank's Monetary Policy Committee (MPC) will today begin its two-day meeting with economists predicting that the repo rate will remain unchanged at 5.5 percent.

"Nedbank expects the MPC to keep rates unchanged at 5.5 percent which will keep prime rate at 9 percent," said Nedbank economists.

Standard Bank senior economist Dr Johan Botha said oil prices had fallen in the last couple of days with reports that it will rise again. "The volatility is a concern making policy quite difficult," said Botha on Tuesday.

At the MPC's last meeting in March Governor Gill Marcus said that the bank would keep a watch on rising food prices.

"Food prices are still rising therefore I don't think the MPC will change its view also given the exchange rate which is volatile and strong. The outcome would be that the central bank will watch developments closely," explained Botha. Standard Bank expects a rate hike in 2012.

In November, the Reserve Bank slashed the repo rate by 50 basis points reducing it to its lowest in 30 years. Since December 2008, the repo rate has been cut by 650 basis points.

The meeting is the third one since the year kicked off. The MPC will announce its decision on Thursday afternoon.

Most Read

SAnews on Twitter