Economists predict the Sarb to hike the repo rate by 25bps.
Despite positive news that inflation cooled to 5.4%, economic experts still expected the South African Reserve Bank (Sarb) would hike the interest rate by 25bps on Thursday, as it announced its Monetary Policy Committee’s (MPC) decision on the country’s interest rates.
It was not clear whether Sarb might keep the repo rate steady at its announcement on Thursday.
Anchor Capital investment analyst, Casey Delport, said: “We still expect the Sarb to hike the repo rate by 25bps this week.
“While this latest dip in inflation back into the Sarb’s target range of 3-6%, the MPC will remain concerned by the ever present rand-negative risks currently at play within the South African economy, in addition to inflation expectations still exceeding the bank’s preference, even though wage pressure remains contained.”
FNB senior economist, Koketso Mano, added: “Above target inflation expectations over the period to 2025, as well as funding risks related to a widening current account deficit amid tighter global financial conditions, should result in the MPC delivering another 25bps hike at their upcoming meeting.
“However, the falling probability of an extended resumption of interest rate hikes in the US, the improvement in the rand since the previous MPC, slower credit demand and inflation outcomes that are now within the target range should soften any further upside risk to interest rates.”
Cape Times