The central bank's Monetary Policy Committee kept its key lending rate on hold at 6.5% as expected on Thursday 21 November. But the vote was close, with three MPC members voting to hold and two favouring a 25 basis point cut. The arguments in support of either view are finely balanced.
The final 2019 Monetary Policy Committee (MPC) statement delivered by the South African Reserve Bank (SARB) governor, Lesetja Kganyago, struck a number of doveish notes that may have briefly raised hopes among those listening to his delivery that a rate cut was in the offing.
"Although GDP growth rebounded to 3.1% in the second quarter, longer-term weakness in most sectors remains a serious concern. Based on recent short-term economic indicators... the third quarter GDP outcome is expected to be weak," the statement said. Indeed, a slew of data suggests that the economy may have contracted in Q3.
The MPC did not speculate on that grim possibility, but the SARB's forecast for 2019 overall growth was lowered to 0.5% - in line with the Treasury's - from 0.6% previously. And it further noted that it assessed "the risks to the growth forecast to be to the downside".
Alongside global trade...