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of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
south africa
Executive Summary
- SARB to remain on hold at 3.50%, despite markets having almost fully priced in a +25bp hike
- Governor Kganyago will likely be cognizant of high unemployment, muted demand factors, a wide output gap and Eskom load-shedding weighing on the fragile outlook.
- The SARB is likely to upgrade its 2022 average CPI forecast from 4.2% to ~4.5%, in line with the midpoint of the SARB's target range
- Governor Kganyago should continue to look through temporary oil-induced shocks towards the medium-term disinflationary trajectory - but maintain hawkish guidance to avoid sounding too dovish
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The SARB is at a key inflection point this week with market pricing diverging from a marginal consensus in favour of a hold at 3.50%. In light of the still-muted aggregate demand impulse, elevated unemployment and relatively benign medium-term inflation outlook, we retain our call for rates unchanged out to 1Q22 with Governor Kganyago cautious not to curtail SA's fragile recovery with CPI still within the 3-6% target range.
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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