A last round of resources for the MPC Schools challenge Reply

The Reserve Bank’s MPC school challenge draws to a close this week. Just in time for these learners to make their repo decision, the first quarter GDP growth numbers have been released. Economic growth was slower, but not as slow as economists expected. Remember, if growth is weak the SARB would have to have very bad inflation expectations to raise rates. You might argue that the weak growth is a reason to cut the repo rate. However, with the current uncertainty (and potential calamity) in the EU and weak global growth prospects, such stimulus is likely to be wasted in credit fueled consumption spending, rather than leading to investment and job creation. To our minds everything points to keeping the repo unchanged. But don’t just take our word for it, have a look at what others are thinking:

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