What to expect from the Reserve Bank and interest rates in South Africa this week
South African economists and analysts say the country should brace for another interest rate hike this week as the South African Reserve Bank’s Monetary Policy Committee meets over the next few days.
BNP Paribas chief economist Jeff Schultz said, “high and sticky inflation and inflation expectations means that we think the SARB still has more work to do in ensuring inflation comes back sustainably towards its preferred 4.5% midpoint target.” “The main reason is that… the MPC will take out insurance against further disorderly rand declines. However, the economy does not need higher rates as domestic inflation pressures are largely supply-related,” he said.
According to the Bureau for Economic Research , globally, the focus is likely to remain on possible further contagion from the banking problems that originated in the US. “This will take the policy rate to 7.5%, 50bps above the SARB’s estimate of the neutral policy rate,” it noted.While most experts agree that a rate hike will hit this week, they are less united on what lies ahead for South Africa’s interest rates.
Efficient Group chief economist Dawie Roodt is part of those who predict rate increases for both the March and May meetings.
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