The Repo and Prime Lending Rate for 2019

Wealth

The Repo and Prime Lending Rate for 2019

Governor of the SARB, Lesetja Kganyago, said the bank now expects GDP growth of 0.7% in 2018, 1.7% in 2019 and 2% in 2020. Kganyago reiterated the independence of the central bank in reaction to calls to nationalise the institution. 

The SA Reserve Bank (SARB) in the past week kept the repo rate unchanged at 6.75%, in line with the expectations of most economists and analysts. With the repo rate unchanged at 6.75%, the prime lending rate will remain steady at 10.25%. Governor of the SARB, Lesetja Kganyago, said the bank now expects GDP growth of 0.7% in 2018, 1.7% in 2019 and 2% in 2020. Kganyago reiterated the independence of the central bank in reaction to calls to nationalise the institution.

The local market responded mixed to the announcement, with the financial sector gaining 0.5%. With the stronger rand remaining at around R13.83 to the USD, the industrials gained 0.32% for the week. Although the resources sector lost some of its shine and closed down 0.23%, the local market experienced a slight gain of 0.16%.

Globally, British Prime Minister Theresa May faced a crushing defeat in a historic vote on Tuesday over the Brexit deal she has struck with the European Union, leaving the world’s fifth largest economy in limbo. May’s withdrawal agreement was voted down 432 to 202, the largest in the history of the House of Commons. With the clock ticking toward 29 March, in the absence of consensus the UK risks a no-deal Brexit, which most observers on both sides of the English Channel fear could be a disaster.

In the US, the Trump administration estimates that the partial government shutdown will subtract 0.1% from the pace of economic growth each week, doubling its earlier forecast of a 0.1% drop every two weeks, taking into account ripple effects on government contractors. Surprisingly, the White House forecast is more aggressive than that of Wall Street. With the first quarter of the year generally the weakest for GDP growth, an extended shutdown could put growth into negative territory for the quarter. The US government failed to pay some 800 000 federal workers in the longest government shutdown in history.

The price of Brent crude oil is rising steadily and traded at around $62.65 per barrel. A mere month ago, the commodity traded at approximately $53 per barrel.

With most people back at work after the festive season, the Treasury has confirmed Finance Minister Tito Mboweni will deliver his maiden budget speech in parliament on 20 February.

 

 

Kind regards,

 

SECURITAS – Wealth Management