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BofA Reverse Call for SARB Hike in Nov, Now Expect Cumulative 50bp of Cuts in 2024

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  • BofA are reversing their call for a SARB hike at the November 23 meeting. Year-end inflation of 5% and a policy rate of 8.25% is more than a 3% positive real rate – enough for SARB to remain on hold, in their view.
  • They now expect the SARB to stay on hold at the November meeting and in 1H 24, keeping rates higher for longer. They see the next move as a cut to the policy rate and forecast cuts of a cumulative 50bp in 2024 starting in July and 75bp in 2025.
  • On ZAR, BofA maintain their view that dollar weakness will bring ZAR strength into 2024, as a dovish Fed and global central banks generally support a weaker USD and favour EM currencies. They forecast USD/ZAR averaging about 18 in 2024, with a likely best level of 17.5 in 3Q. A Fed cutting cycle would add to USD weakness and support ZAR strength, they say.
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  • BofA are reversing their call for a SARB hike at the November 23 meeting. Year-end inflation of 5% and a policy rate of 8.25% is more than a 3% positive real rate – enough for SARB to remain on hold, in their view.
  • They now expect the SARB to stay on hold at the November meeting and in 1H 24, keeping rates higher for longer. They see the next move as a cut to the policy rate and forecast cuts of a cumulative 50bp in 2024 starting in July and 75bp in 2025.
  • On ZAR, BofA maintain their view that dollar weakness will bring ZAR strength into 2024, as a dovish Fed and global central banks generally support a weaker USD and favour EM currencies. They forecast USD/ZAR averaging about 18 in 2024, with a likely best level of 17.5 in 3Q. A Fed cutting cycle would add to USD weakness and support ZAR strength, they say.