South Africa – More SARB easing to come
18 May 2020 | Economy | General | Razia Khan Chief Economist for Africa and the Middle East at Standard Chartered Bank
• We now see the year-end repo rate at 3.5% in 2020 (4.25% previously) and 4.5% in 2021 (5.0% previously)
• With demand exceptionally weak, we expect further SARB easing in May (50bps) and July (25bps)
• Negative real rates unlikely, barring a sustained breach of the lower bound of the inflation target • Structural loss of spare capacity would influence the timing of eventual SARB tightening
• We lower our CPI forecasts to an average of 3.4% in 2020 (3.9% prior), and 3.9% in 2021 (4.2% prior)
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