"Despite what the QPM suggests, I think this is a story of unchanged interest rates for quite some time," said Elize Kruger, a senior economist at NKC African Economics. "If anything, headline consumer-price inflation could be lower than what they are forecasting – despite factoring in higher electricity, food and fuel prices the forecast is unchanged.
Power-supply constraints and weak business confidence will likely limit near-term production and investment prospects, the governor said. The bank lowered its growth outlook to 1.3% from 1.7% as rolling blackouts damp prospects of a strong recovery from last year's recession. Africa's most-industrialised economy hasn't grown by more than 2% a year since 2013.
"The committee remains of the view that current challenges facing the economy are primarily structural in nature," Kganyago said. "Given current economic vulnerabilities, prudent macroeconomic policies combined with structural reforms that raise potential growth and lower the cost structure of the economy, have become even more urgent."
Since Cyril Ramaphosa replaced Jacob Zuma as president a year ago, after winning the party leadership vote by the narrowest of margins, opponents within his African National Congress have retained some top ANC and state posts and advocated policies such as land seizures that have harmed investor confidence.
The search for a third deputy governor and sixth member of the MPC continues after Francois Groepe resigned in January. His successor will be the first senior executive at the central bank to be appointed Ramaphosa.
What Bloomberg's economist says:
"The Reserve Bank made sharper cuts than expected to its growth and inflation forecasts for 2019. This, together with a tumble in inflation expectations lowers the barrier for the Reserve Bank shifting back to supporting economic growth. We retain our forecast for the Reserve Bank to remain hold but now see it as likely that coming meetings may see dissenting votes for cutting rates." – Mark Bohlund
