Sign in
Research link-chevron Created with Sketch.
link-chevron Created with Sketch. Products and Services link-chevron Created with Sketch.
link-chevron Created with Sketch. Products and Services
Economics link-chevron Created with Sketch.
FX Report
The Loop
Inside China
Insights & Strategy
Equities link-chevron Created with Sketch.
Corporate Commissioned Research
Analysts
Analysts
Help and Support
Help and Support
Corporate and Investment Bank
Standard Bank Group
The SA Daily 14 August 2018

Market more sure of hikes

  • Unsurprisingly, SA money market rates have risen in response to global turmoil and rand weakness.
  • Early last week, there was a less than a 50% chance of a 25 bps rate hike priced for H2:18. But now, poorer risk sentiment and the rand weakening have the market fully convinced of a 25 bps hike by end 2018.
  • In total, the market is fully pricing in two 25 bps interest rate hikes over the next 12 months.
  • However, we foresee steady interest rates over this time because we expect the rand to recover before the SARB’s next MPC meeting on 20 September. If so, the SARB will mostly likely keep rates on hold.
  • Should the rand however stay around current levels, a rate hike would be possible. At current rand levels, inflation could exceed the SARB’s 3-6% target for much of 2019, in which case the risk would be to the timing rather than the extent of likely rate hikes over the medium term (see Global headwinds of 13 August, by Elna Moolman).

Read PDF