21 May 2015
SARB hints at the possibility of rate hikes – TDS
FXStreet (Edinburgh) - Strategist at TD Securities Paul Fage anticipates the SARB could tighten its monetary policy later in the year.
Key Quotes
“At today’s MPC meeting, the South African Reserve Bank (SARB) kept its policy rate, the repo rate, on hold at 5.75%. This was in line with our and the unanimous consensus expectation”.
“We had expected the SARB to remain on hold for the rest of this year, hiking next year following on in the wake of the Fed hiking”.
“However, today’s MPC statement has adopted a distinctly more hawkish tone”.
“While the breach of the top of the 3-6% target band in 2016 is expected to be temporary, the fact that inflation is forecast at 6.1% for the whole of 2016 must be a significant source of discomfort for the SARB and gives them little leeway to accommodate any additional upside moves in inflation”.
“The SARB clearly sees the risks on inflation as being to the upside with electricity tariffs, wages and the rand being major concerns”.
“At the March MPC meeting, the decision to keep rates on hold was unanimous. The fact that at today’s meeting two MPC member’s voted in favour of a 25 bps shows that the point at which rates move higher is closer than we originally thought”.
Key Quotes
“At today’s MPC meeting, the South African Reserve Bank (SARB) kept its policy rate, the repo rate, on hold at 5.75%. This was in line with our and the unanimous consensus expectation”.
“We had expected the SARB to remain on hold for the rest of this year, hiking next year following on in the wake of the Fed hiking”.
“However, today’s MPC statement has adopted a distinctly more hawkish tone”.
“While the breach of the top of the 3-6% target band in 2016 is expected to be temporary, the fact that inflation is forecast at 6.1% for the whole of 2016 must be a significant source of discomfort for the SARB and gives them little leeway to accommodate any additional upside moves in inflation”.
“The SARB clearly sees the risks on inflation as being to the upside with electricity tariffs, wages and the rand being major concerns”.
“At the March MPC meeting, the decision to keep rates on hold was unanimous. The fact that at today’s meeting two MPC member’s voted in favour of a 25 bps shows that the point at which rates move higher is closer than we originally thought”.