Macroeconomic Forecast South Africa

BMI View: In line with our expectations, the South African Reserve Bank (SARB) cut the repo rate by 50 basis points (bps) on November 18, taking the benchmark lending rate to 5.50%. SARB attributed the decision to two main factors: a lowering of its inflation forecasts and a still-fragile recovery in domestic demand. Looking ahead, our core scenario is for the repo rate to remain at 5.50% for an extended period, since the central bank has just given one final 'shot in the arm' to the economy and with domestic demand in the recovery mode, further cuts may not be deemed necessary.

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