Economists expect repo to remain at 5%

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Central bank govenor Gill Marcus. Photo: Mxolisi Madela.

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Johannesburg – The repo rate is expected to remain unchanged at 5.0% at the first monetary policy committee (MPC) meeting of the year set to take place from Tuesday to Thursday‚ according to a survey of eleven leading economists by I-Net Bridge.

Of the eleven economists surveyed‚ none foresaw a rate cut on the cards. The interest rate was cut by 50 basis points to 5.0% in July 2012 and has remained unchanged since then.

The Reserve Bank has in total reduced the repo rate by 700 basis points since December 2008.

The MPC is expected to focus on recent global and economic developments‚ particularly rising inflation‚ rand weakness and economic growth prospects.

Renaissance Capital economist Elna Moolman said the Reserve Bank seemed to be somewhat concerned about the lingering upside risks to the inflation trajectory from a variety of factors‚ including rising food prices‚ the weaker rand‚ the methodological changes to the CPI measure from January 2013 and wages.

“We continue to regard the exchange rate as the key upside risk to inflation‚” Moolman said.

Meganomics economist Colen Garrow agreed‚ saying the volatility in the rand exchange rate was among factors that would likely influence the decision to leave the repo rate on hold.

The rates decision will be made shortly after 15:00 local time on Thursday‚ January 24. - I-Net Bridge