Reserve Bank to announce interest rates decision

Ajouté : 2026-05-28

[00:00:00]So, let's speak to SABC News Economics Editor Thabo Mbeki as we wait for the MPC announcement. Thabo, good to see you. So, um are we going up or down?

[00:00:08]What are the expectations around rates?

[00:00:09]>> Well, if you look at the market, you've touched on the bond market. Um most economists, the house view is that they will hike 25 basis point. Uh because if you look back, um the Reserve Bank tends to act earlier. They look through the current shocks and uh see where inflation is likely to be in the future. Um expectations uh broadly is that inflation will peak at around 5% in the fourth quarter of of this year.

[00:00:40]Uh and they need to arrest it much earlier because if they don't, if inflation get out of hand, maybe 6%, 7%, it becomes very, very difficult to control. So, they need to make it very clear and loud that we want inflation at 3%. So, everything that is being discussed, whether it's your wages, whether it's adjustments, anything else should be around uh 3%. Unfortunately, the the the supply side is where we seeing this current inflationary pressures emanating from. Uh but as they say, the the Reserve Bank Governor often say, "If you have a snake in the house, whether it's from the You don't ask if it's from the demand side or the supply side. You kill the snake." So, um you will definitely probably have to act early, uh which is what helped us in the previous years when uh other central banks had to implement huge monetary policies. Uh we had already implemented ours, and we avoiding, you know, shocking the the economy cuz if you're going to put a 1% because you are late to act, that will have a serious negative impact on the economy.

[00:01:52]>> So, if we do get an interest rate hike in the next half an hour of what, 25 basis points is the general expectation.

[00:01:59]How much pressure will that put on people with bonds, car repayments, etc.?

[00:02:04]>> Well, I'd rather take the pressure now knowing that you will >> That's not the answer we're looking for.

[00:02:10]>> We will be able to contain inflation in the future and it will probably be a gradual. I mean, economists are some are pricing about three hikes.

[00:02:19]>> Back to back?

[00:02:21]>> Well, whether back to back or not, but between now probably maybe early next year. But that's if the current oil price and inflationary shocks are contained. But if we are seeing further spikes in the international oil price and of course the weakening, that's a completely different discussion. But two or three hikes are already penciled in in the market given the current scenario.

[00:02:45]>> But the Reserve Bank or the MPC in fact has been criticized, right? Whenever there are rate increases, especially around this inflation targeting priority that it keeps going back to. Some have said that's not necessarily a decision that is in the real term in favor of people who are already so hard-pressed financially.

[00:03:07]>> Well, it has served us well to have inflation I mean currently around 4%.

[00:03:14]It's it's it's largely and partly because of the action of the Reserve Bank. Because remember when they are hiking interest rates, they're actually communicating a message to you and I and as well as the financial market that we need to change our behavior.

[00:03:32]So as a result, you find on the demand side, we don't buy as much as we should and that helped to maintain prices at a certain level. So even if we see inflation going up, but it's not a significant increase in inflation.

[00:03:48]Even when it comes to salary negotiations because we're saying we are looking at 3% target. So, most people they look at as a as a kind of a a guide when they negotiate. And as a result, that helped to keep prices at a certain level mainly with the target of 3% around there.

[00:04:07]>> So, the war in the Middle East, the blockade around the Strait of Hormuz, how big of a factor is that in where we are currently and in terms of the direction of the rates decision that the MPC has to make today.

[00:04:21]To what extent are we still following global trends? I'm thinking of the Fed for instance in the US.

[00:04:25]>> Very important. I think if you look at the models that many houses put up is for this current tension in the Middle East to end towards the end of the year by September, October. And that's with three two to three hikes.

[00:04:41]>> Mhm.

[00:04:42]>> But if this current tension goes beyond the end of the year, I think yeah, we will face some very difficult uh you know, 2027 going >> Well, it's difficult now in 2026. No good news from you, Thabiso, but thank you nonetheless for putting it all into perspective. That's SABC News Economics Editor Thabiso Mogwai speaking to us. By the way, just to remind you that the Monetary Policy Committee's decision on rates will be made at 3:00. We'll carry it live for you here on SABC News.