JPM Expect SARB To Deliver Further 25bp Hike This Month, First Cut In 1Q24

JP Morgan say in a note that they "believe that a deterioration in the risk assessment now favours a further 25bp hike by the SARB in March in a split decision," while the first rate cut will likely come in 1Q24 rather than this coming November.

• They have marked up the near-term inflation projection amid the anticipation that higher cost-push pressures from FX and electricity cuts will moderately raise prices at the consumer level and that health insurance inflation will settle on the higher end of expectations. They now expect the SARB to deliver the first rate cut in 1Q24, from November 2023 previously.
• "To be sure, the policy rate probably is near its peak. But global developments and expectations for continued policy tightening in developed markets will keep the SARB alert to the moderate deterioration in the near-term inflation outlook and the vulnerability to further rand weakness given the worsening current account outlook."
• "Local developments alone probably would not prompt further policy tightening, we believe, but when these are overlaid with the global backdrop the SARB probably will shift to risk management mode resulting in a hike on the changing balance of inflation versus growth risks. In this regard, the upcoming data on the current account and the demand side of the 4Q22 GDP report are particularly relevant."