Reserve Bank could hold off on more interest rate cuts this year

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Reserve Bank could hold off on more interest rate cuts this year

Recovery in the economy will give the Bank’s MPC room to err on the side of caution, analysts say

Sunita Menon and Odwa Mjo

The Reserve Bank’s monetary policy committee (MPC) could remain in limbo for the rest of 2019 and keep interest rates unchanged.

The committee, which will have two more meetings this year, will have to weigh a volatile exchange rate and a slight rebound in the economy against looser global monetary policy – a combination that could see them play it safe.

The MPC cut interest rates by 25 basis points (bps) last month, effectively reversing a controversial interest rate hike in November 2018. The Bank cited lower growth and lower inflation expectations for the cut. While some analysts called for a 50 bps cut at the time, the MPC said it did not consider it. Now, analysts are speculating that the Bank won’t make another move this year...

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