The US Federal Reserve’s decision to hike interest rates by 75bp on Thursday reinforces the likelihood of higher rate hikes in South Africa, says Investec chief economist Annabel Bishop.
The US Federal Reserve’s decision to hike interest rates by 75bp on Thursday reinforces the likelihood of higher rate hikes in South Africa, says Investec chief economist Annabel Bishop.
“Currently, we continue to expect a 50bp lift in South Africa’s repo rate from the monetary policy committee meeting in July, with the South African Reserve Bank likely to follow the direction, but not necessarily the exact moves of the Federal Open Market Committee , which has hiked in consecutive 25bp, 50bp and 75bp tranches so far this year.”
“After remaining unchanged at 5.9% y-o-y in April, we expect inflation to accelerate to 6.1% in May – this is in line with the consensus forecast,” the Bureau for Economic Research said in a research note on Monday. These inflation figures, which are not unique to South Africa, are expected to be felt across the global markets as central banks look to rate hikes to bring them under control. In South Africa, inflation reached 5.9% in April 2022.Bishop added that the rand is currently expected to average R15.
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