Repo to increase again

By Evan Pickworth

Standard Bank's Economics Unit expects one more increase in the repo rate in June, taking prime to 15.5%, then a static stance for eleven months before a cut in the repo by 50 basis points in June 2009.

The analysts expect the rate to then drop by another 50 basis points in August and then by another 50 to a prime rate of 14% in October.

They then expect it to remain unchanged in December 2009.

Juxtaposed to this is Standard Bank's forecast for CPIX inflation.

They see it going to 9.6% in March, dipping gradually to 9.0% in June, but then hitting 9.6% again in August.

The analysts see the 2008 annual average for CPIX 9.2%.

Better news comes in 2009, where they see an annual average of 6.4%.

The analysts foresee CPIX dipping back below the 6% upper limit in September 2009, and then remaining there for the rest of 2009.

South Africa's electricity regulators meet to decide on price increases on June 6. Forecasts are likely to be adversely affected by the potential approval of radical increases.