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Economist doubt there will be immediate cut in interest rates

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Nedbank Chief Economist Dennis Dykes says it’s unlikely there’ll be an immediate cut in interest rates despite Stats SA announcing that consumer inflation decreased by point one of a percentage point to 3.6% in November.

The main contributors to the slowdown in the inflation rate came from food and non-alcoholic beverages; housing and utilities; and miscellaneous goods and services.

Dykes says while the drop in the inflation rate provides enough incentive for the Reserve Bank to cut rates in January, a rate cut at this point is highly unlikely.

“I think there’s a window of opportunity in the January meeting that the MPC may take the decision to give some relief as far as interest rates are concerned. The only difficulty there is that ahead of the national budget and just after the budget you’ve got the sovereign rating agencies meeting once again so they might feel a bit nervous cutting interest rates ahead of that.”

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