As widely anticipated, the Monetary Policy Committee (MPC) continued its cautious stance of easing monetary policy by cutting the repo rate by only another 25 bps. This is still good news for business and consumers as 2024 draws to a close.
The outlook for inflation now seems benign, with inflation likely to settle around the 4.5% midpoint of the SARB’s target range. Barring shocks, there must now be scope in the early months of 2025 for further interest rate cuts to underpin the incipient but uneven economic recovery.
On growth prospects the SARB now projects a 2% GDP growth rate for SA by 2027. The MPC emphasises that this better growth path is based on sustaining domestic reform initiatives, maintaining prudent public debt levels, and keeping wage settlements in line with productivity.
There needs to be wider recognition of the extent to which short-term business confidence must steadily and deliberately be converted into long-term investor confidence, upon which higher job-rich growth ultimately depends.