18 May 2015
South Africa and Indonesia: monetary stance likely to remain intact – TDS
FXStreet (Edinburgh) - In the view of strategists at TD Securities, the SARB and BI will likely keep their monetary policy status quo unchanged at this week’s meeting.
Key Quotes
“In Indonesia, we think domestic conditions continue to support the view of a final 25bp cut from BI in this cycle, but not tomorrow”.
“The Bank has sometimes had a habit to surprise, and risks still lean to the downside, despite the temporary re-acceleration in inflation”.
“A delay of the Fed lift-off, or a sudden fall in CPI will support easing at a later stage, while a quicker Fed hike than the market expects, or further acceleration in inflation would support tighter monetary policy in Indonesia to stem IDR weakness”.
“In South Africa, we see little reason for the SARB to move its policy rate, even though the statement following the March MPC was somewhat more hawkish”.
“Although April headline CPI (due Wed) is expected by the markets to increase to 4.6% Y/Y from a prior 4.0%, it remains comfortably in the 3-6% target range”.
“Core has been persistently high and should remain at 5.7% in April, but the SARB expects it to come down gradually, averaging 5.5% over the whole of 2015”.
Key Quotes
“In Indonesia, we think domestic conditions continue to support the view of a final 25bp cut from BI in this cycle, but not tomorrow”.
“The Bank has sometimes had a habit to surprise, and risks still lean to the downside, despite the temporary re-acceleration in inflation”.
“A delay of the Fed lift-off, or a sudden fall in CPI will support easing at a later stage, while a quicker Fed hike than the market expects, or further acceleration in inflation would support tighter monetary policy in Indonesia to stem IDR weakness”.
“In South Africa, we see little reason for the SARB to move its policy rate, even though the statement following the March MPC was somewhat more hawkish”.
“Although April headline CPI (due Wed) is expected by the markets to increase to 4.6% Y/Y from a prior 4.0%, it remains comfortably in the 3-6% target range”.
“Core has been persistently high and should remain at 5.7% in April, but the SARB expects it to come down gradually, averaging 5.5% over the whole of 2015”.