By Vuyani Ndaba
JOHANNESBURG, March 18 (Reuters) - South Africa's central bank will cut interest rates by 50 basis points on Thursday, more than expected a week ago, following aggressive moves by other major central banks trying to mitigate damage from the coronavirus outbreak, a Reuters poll forecast.
So far, the reported rate of coronavirus infection has been low in South Africa compared to other countries but there is a median 60% probability the South African Reserve Bank cuts the repo rate more than 25 bps this month, according to economists who answered an extra question.
The SARB has not cut in increments larger than 25 bps since 2012.
None of the 22 economists polled this week expected rates on hold on Thursday and 13 expected a 50 bps cut to 5.75%. Seven said rates would be cut 25 by bps and one said the bank would slash the repo rate by 75 bps.
Nedbank economists said the SARB will cut by one full percentage point, the same size move as the United States Federal Reserve delivered on Sunday.
"We are living in unprecedented times. The closest example to this is after the great financial recession - then we did see that (kind of) chop in rates," said Busisiwe Radebe, economist at Nedbank.
In last week's Reuters poll, 12 economists said the SARB would cut by 25 bps to 6.0% at the March meeting, while five said it would deliver a 50 bps cut. The other four said it would keep rates on hold.
After the expected 50 bps cut on Thursday, the repo rate will remain unchanged until the bank cuts by 25 bps to 5.5% in either January or March 2021, medians in the latest poll showed.
The Fed slashed rates to near zero on Sunday, the second rate cut in as many weeks in another emergency move as the coronavirus pandemic tightens its grip on societies across the world, forcing widespread lockdowns and upending the global economy.
"Given how the Fed has cut dramatically as they have now - and remember, they don't have the type of room we have - we think it (SARB) will cut equally to what they cut, we think it will be 100 basis points," said Radebe.
Dozens of central banks have also cut rates recently.
South Africa's statistics agency confirmed the economy entered its second recession in two years late last year as agriculture, transport and construction activity contracted, with an unreliable power supply the main impediment to growth.
"The forward rate agreements curve has fully factored in a 25 basis point interest rate cut for this week's MPC meeting, and has virtually factored in a 50 basis point cut," noted Investec Chief Economist Annabel Bishop.
"The probability...has risen, but the risk of a Moody's downgrade at the end of the month could scupper the chance of a 50 basis point cut, given that it could push the domestic currency towards R18/$ if the current severe risk-off environment in global financial markets persists."
(For other stories from the Reuters global long-term economic outlook polls package )
South African interest rates, growth and inflation since 2008https://tmsnrt.rs/2TJCXNc
(Editing by Jonathan Cable and Nick Macfie)
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