The inflation rate has now fallen to a 5-year low, and is well below the Reserve Bank’s target range of 3%-6%.
Image: File
The news that the CPI inflation rate has dropped to just 2.7% in March, from 3.2% in February, boosted by the falling oil price, is the clearest indication that the Reserve Bank needs to cut the interest rate now.
This was according to Samuel Seeff, chairman of the Seeff Property Group.
The inflation rate has now fallen to a 5-year low, and is well below the Reserve Bank’s target range of 3%-6%.
Seeff, reiterating his call that the SARB missed the opportunity to cut the rate by at least 25bps in March, said a vital economic boost is now needed.
The rising oil price was a major factor in driving up the interest rate, and it has now declined by more than 22% compared to the same time last year (Brent Crude Oil at $68.44 vs $88.22 in April 2024 per tradingeconomics.com) despite the “tariff-wars.”
The rand stabilised at around R18.58, after the renewed volatility driven by the fears around stability of the GNU and the VAT debacle, providing further impetus for the Bank to cut the rate.
The weak economic growth outlook must now weigh on the Bank to cut the rate, especially in view of the IMF (International Monetary Fund) announcing that it has cut its predicted growth to just 1% (from 1.5% previously).
This clearly signals the urgent need for the SARB to step in to provide relief to consumers and the economy, Seeff said.
"The current interest rate level is still 100bps higher compared to the pre-pandemic rate in January 2020, and it is hampering the economy. The lower interest rate in 2020 showed the tremendous boost to the economy and property market over that period," Seeff added.
"We can now clearly see the inverse effect of keeping the interest rate unnecessarily high for so long since with basically almost no economic growth of just 0.6% for the last two years respectively.There is no need for the Bank to wait. It can in any event always step in if the need arises as was the case during the pandemic. However, to restrain the economy and property market with a high interest rate is clearly having an inversely negative effect on the economy, and by extension, the property market.Seeff says amidst swirling global geo-political instability and tariff-wars, we need stability, and a vital economic stimulus," Seeff said.
"Investors need to know that SA is politically and economically stable with a focus on GDP growth and job creation. Being more responsive and providing an interest rate cut will boost confidence, and provide a much needed growth boost," he added.
Samuel Seeff, chairman of the Seeff Property Group.
Image: Supplied.
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