Standard Bank expects four rate cuts in 2024

Garth Theunissen - Africa's largest lender, Standard Bank, is forecasting four rate cuts of 25 basis points each by the end of the year as inflation continues to ease towards the mid-point of the South African Reserve Bank's 3% to 6% target range.

This means the bank expects a repo rate of 7.25% by year-end, one percentage point below the current level of 8.25%.

Standard Bank chief economist Goolam Ballim says this will most likely begin in the second quarter, implying cuts at each of the monetary policy announcements scheduled for 30 May, 18 July, 19 September and 21 November.

Inflation

While Ballim said recent statements by US policymakers suggest the Federal Reserve will delay its rate-cutting cycle due to stronger than anticipated economic data, easing inflationary pressures may give local policymakers the space to begin cutting earlier.

"We anticipate that it will mostly be quarter point cuts," Ballim said at a Wednesday presentation the bank's current economic forecast for 2024.

"We think we could conceivably cut before the Fed. The idiosyncratic path of inflation will matter to central banks more than the Fed."

Standard Bank's rate outlook is premised on its forecast that consumer price inflation will average 5% in 2024, down from a forecast 5.9% average for 2023 and just half a percentage point above the 4.5% mid-point of central bank's 3% to 6% target range.

Annual consumer price inflation slowed for a second straight month in December, slipping to 5.1%, the lowest since August last year. – Fin24