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 20 July 2018

SARB hawkish, but on hold

  • The SARB has kept interest rates unchanged at 6.5%, citing the risks to the inflation outlook as being to the upside; the bank has revised its inflation forecasts upward.
  • We also see the inflation risks as to the upside, particularly from the weaker rand and higher oil prices. Nevertheless, we believe that these risks are being counteracted by still benign underlying inflation pressures, supported by inflation expectations (as surveyed by the BER) still being subdued despite the upward price pressure from the rand, oil prices and tax hikes.
  • Inflation expectations will likely be a key driver of monetary tightening. We now see inflation forecasts as increasingly important. Should the inflation trajectory meet the SARB’s forecasts, a hiking cycle may very well start sooner than we currently expect. The SARB now seems more adamant about anchoring inflation and inflation expectations around the mid-point of the target range. However, the bank is willing to look beyond the first-round inflation impact of any shocks only until such time that inflation is pushed away from the target mid-point rather than when pushed outside the target range (see Hawkish MPC holds steady of 19 July, by Elna Moolman).

Read PDF