First National Bank said after a positive but sluggish performance by the South African economy last year, the new year brings with it the possibility of a sustained economic recovery from current levels.
FNB CEO, Jacques Celliers was commenting on Thursday on the decision by the Reserve Bank to leave the prime lending rate unchanged at 6.75%pa.
He said however that “we should not underestimate the work required to rebuild our economy after years of low growth. Uplifting ourselves from this position will require a sustained effort across the public and private sectors.”
“January is an ideal time for consumers to take concrete steps towards greater financial security in 2018. A good starting point is to make a firm commitment to savings and investments to achieve goals such as buying a house or saving for retirement,” said Celliers.
He continued to urge consumers to act with care and to ensure their budgets are able to accommodate possible increases in taxes and electricity.
FNB Chief Economist, Mamello Matikinca, said: “In line with our expectations, the SARB MPC opted to keep the repo rate unchanged at 6.75% at its January 18th meeting. Despite inflation being well contained and a meaningfully stronger currency, the Reserve Bank remains concerned about the risks to the inflation outlook.”
“These risks stem from a rising oil price, the National Budget in February and the possibility of a Moody’s downgrade in March. Such a downgrade would precipitate capital outflows and a weakening currency; we believe the SARB will wait until event risk subsides before pronouncing on any rate moves. Should event risk dissipate, we see scope for a rate cut this year,” said Matikinca.
