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JPM On SARB

SOUTH AFRICA
  • JPM pencils in a 75bp hike (previously 50bp) at the next meeting to take the repo rate to 6.25%.
  • JPM inflation forecasts are considerably higher than the SARB’s revised estimates in the very near-term: analyst estimate an inflation peak of 7.8% in 3Q22, while the SARB projects “only” a moderate further rise to 7% in 3Q22 from the 6.8% realized 2Q22.
  • Tied to the accelerated hiking by DM central banks and overall tightening in global financial conditions, exchange rate volatility likely remains elevated and adds upside risk to 2023 inflation.
  • This may even result in a bigger move of 100bp if risks materialize.
  • JPM retain its terminal rate estimate of 7.25%, but now see this already achieved by 1Q23 (from mid-23 previously) with a 50bp hike in November.
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  • JPM pencils in a 75bp hike (previously 50bp) at the next meeting to take the repo rate to 6.25%.
  • JPM inflation forecasts are considerably higher than the SARB’s revised estimates in the very near-term: analyst estimate an inflation peak of 7.8% in 3Q22, while the SARB projects “only” a moderate further rise to 7% in 3Q22 from the 6.8% realized 2Q22.
  • Tied to the accelerated hiking by DM central banks and overall tightening in global financial conditions, exchange rate volatility likely remains elevated and adds upside risk to 2023 inflation.
  • This may even result in a bigger move of 100bp if risks materialize.
  • JPM retain its terminal rate estimate of 7.25%, but now see this already achieved by 1Q23 (from mid-23 previously) with a 50bp hike in November.