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Speaker 1: The Reserve Bank's Monetary Policy Committee due to announces its

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Speaker 1: interest rate decision tomorrow, and up until about three weeks ago,

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Speaker 1: looked like we would get a cut. I think almost

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Speaker 1: certainly a hold now because fuel prices will go up

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Speaker 1: so strongly in about two weeks time. But the underlying

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Speaker 1: trends of our economy were still moving in the right direction.

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Speaker 1: The paying net salary index during average salaries we're at

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Speaker 1: by point one percent between January and February. Eliz Kruger

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Speaker 1: is an independent economist. At least, Good evening, Thanks for

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Speaker 1: your time. It has been quite a consistent increase in salaries,

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Speaker 1: I mean small month to month. What's been driving this increase?

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Speaker 2: Good Evening, Stevens. Yes, I think we started the year

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Speaker 2: often a good footing with salaries, you know, ticking high.

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Speaker 2: Yet it's actually a recovery that started in twenty twenty

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Speaker 2: four and has been a ongoing and really a reflection

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Speaker 2: of bid economic environmentality, you know, and I think, you know,

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Speaker 2: as I today talk a lot about it, I'm thinking

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Speaker 2: we are almost in the same scenario then what we

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Speaker 2: had in COVID. We'll we talk about pre COVID and

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Speaker 2: post COVID now we're talking pre war and post war.

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Speaker 2: So we started a year quite optimistic and we are

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Speaker 2: seeing that you know, still in the figures of FEP

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Speaker 2: that you know, selebis continue to basically stabilize at an

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Speaker 2: elevated level. So it's up to peep. You know, it's

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Speaker 2: been a good story, but unfortunately, you know, the outlook

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Speaker 2: has changed.

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Speaker 1: Yeah, well, I mean we were expecting our economy to

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Speaker 1: really sort of grow this year. Fuel prices will go

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Speaker 1: up now because of the conflict. How do you think

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Speaker 1: it's going to be. And I mean the first consequence,

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Speaker 1: even before field prices go will be the interest rate

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Speaker 1: hold tomorrow.

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Speaker 2: Yes, indeed, that will be the first change, you know,

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Speaker 2: compared to what we have expected. You know, also in

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Speaker 2: my scenario for the year, priced in or assumed to

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Speaker 2: twenty five basis point cuts in the first six months

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Speaker 2: of the year, and now that's definitely off the table.

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Speaker 2: And you know, if I do look at what might

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Speaker 2: the inflation numbers look like if we see by both

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Speaker 2: A or and may quite if if you're increases and

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Speaker 2: a good chance for the second round e FIXT following that,

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Speaker 2: then I'm thinking, you know, hiker hiking scenario is not

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Speaker 2: completely off the table.

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Speaker 1: Well, I mean, the problem is we just don't know

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Speaker 1: what's happening with oil prices, and already sort of commentary

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Speaker 1: that maybe the market's underplaying it. Does this have a

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Speaker 1: knock on effect on salaries or the real value of

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Speaker 1: salaries immediately?

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Speaker 2: This this is a real value, I mean, they you'll

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Speaker 2: see an immediate impact if you know, you think about

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Speaker 2: an average salary increase maybe in the order of an

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Speaker 2: order of about four point five or four point seven,

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Speaker 2: and you're thinking about inflation now maybe four or a

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Speaker 2: bus so deficitally worse than what we expected. You know,

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Speaker 2: we expected another year of real sealerarty increases based on

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Speaker 2: a good economic outlook, and now it seems like we

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Speaker 2: will most probably be in a scenario where we could

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Speaker 2: even have a real drop in salaries. So you will

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Speaker 2: have to see and you know, obviously the erosion of

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Speaker 2: busiting power that is the main impact. We will also

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Speaker 2: see in terms of the higher inflation numbers.

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Speaker 1: A lot of talk about how long it would take

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Speaker 1: things to get back to well, people say normal, but

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Speaker 1: they mean back to the world before the conflict. And

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Speaker 1: I suppose even for us quite far away, it's so

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Speaker 1: dependent on oil that it would take a while for

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Speaker 1: things to get back to the scenario we thought we

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Speaker 1: were looking for at the start of the year.

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Speaker 2: Absolutely, and I think, you know, the crisis has also evolved,

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Speaker 2: you know, from initially being a flow crisis with ships

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Speaker 2: could just not move now to an outright supply crisis

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Speaker 2: in terms of oil and refined products. You know, as

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Speaker 2: longer as long as or the longer the conflict laws,

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Speaker 2: you know, the more supplies of the market, and you know,

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Speaker 2: to get back to the balance and to get back

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Speaker 2: to the levels that don't expect it, it will take

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Speaker 2: quite some time. So even if we do get a

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Speaker 2: near term retolution to the war, I think we will

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Speaker 2: be sort of stuck with higher oil prices for longer.

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Speaker 2: Not the current levels, but I reckon in the order

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Speaker 2: of about I did at the barrel or so, might

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Speaker 2: be a new you know level compared to be before

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Speaker 2: there the walls started.

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Speaker 1: Eliz Gruger, thanks so much. Independent economists really appreciate it.