Citadel’s Ackerman: MPC to hold rates steady

The upcoming meeting of the South African Reserve Bank's Monetary Policy Committee is generating significant interest and speculation as the country's inflation forecast remains steady. Citadel's Chief Economist, Maarten Ackerman, shared insights on the potential direction of interest rates in a recent interview with CNBC Africa's Godfrey Mutizwa. Ackerman highlighted the likelihood of a rate cut at the September meeting, in line with global trends. The US Federal Reserve and other central banks have already initiated rate cuts, setting the stage for South Africa to follow suit. However, Ackerman emphasized the importance of maintaining a cautious approach to ensure that inflation remains within the target range. He pointed out that while the economy is showing signs of improvement, structural challenges and the need to achieve a lower inflation target could delay rate cuts. The recent formation of a government of national unity and a stable rand have created a positive sentiment in the market, potentially opening up avenues for increased investment. Despite this optimism, Ackerman underscored the importance of addressing foreign direct investment (FDI) concerns to attract more capital into the country's economy. Looking ahead, Ackerman expressed optimism about the growth prospects for South Africa, projecting a gradual recovery over the next few years. The government's pro-business stance and efforts to address long-standing structural issues, such as power supply interruptions, are expected to contribute to a steady improvement in economic growth rates. Overall, the ongoing discussions around interest rates and economic growth highlight the delicate balance between inflation management, market sentiment, and long-term structural reforms in South Africa.