“With unchanged interest rates at this stage, the MPC has lost an opportunity to send a more positive signal to business and consumers, given the very low levels of confidence.”

This is according to Prof Raymond Parsons, a well-known economist and academic from the North-West University (NWU) Business School.

“There is indeed room for a further interest rate cut on the basis of the MPC's own presentation of relevant data around the balance of risks. The combination of a weak domestic economy, the reduced inflation risk, and an easing global interest-rate cycle justify a further reduction in borrowing costs at present,” he adds.

Prof Parsons says that with the inflation outlook better anchored, the MPC could therefore have safely given more weight to economic growth at this vulnerable point in South Africa's business cycle.

“Apart from confirming its growth forecast of only 0,6% in 2019, the MPC has now also reduced its growth expectations for 2020 and 2021. A more flexible approach to lowering borrowing costs now would have been useful when South Africa needs to break out of its 'low growth trap'.

“However, it remains true that the real remedies for South Africa's economic malaise mainly lie beyond monetary policy. The basic solutions must still be found in the pro-growth economic structural reforms that the country so urgently needs. It is wrong to think that monetary policy can do more for structural growth and employment than it can in reality, although it can play a helpful supportive role.”