Economist and Professor at the North West University (NWU) says the Monetary Policy Committee (MPC) is expected to keep the repo rate at which the Reserve Bank lends money to Commercial banks at 6,75%. Commercial banks adjust interest rates according to the repo rate. Meyer is of the view that they should in fact cut the repo rate.

 “If I was the Reserve Bank Governor (referring to Lesetja Kganyago) I was going to cut it drastically to promote growth in South Africa.” He says he is most likely to keep the rate irrespective of the decelerating April inflation figures, because “he is very conservative and this is bad for economic growth” concludes Meyer.

Kganyago is set to make the announcement following the MPC’s two day meeting which began on Tuesday, May 21. Inflation for the April month slowed down from 4,5% in March to 4,4% in April, to the surprise of many analysts following several months of fuel hikes. The inflation figures were revealed by Statistics South Africa on Wednesday, May 22. The current inflation remains within the Reserve Bank’s 3% to 6% target band.

Economist and academic, Dr Roelof Botha criticised the Reserve Bank’s refusal to lower interest rates further, last month in Bloemfontein, adding that it’s like imposing another tax on South Africans.

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