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MNI SARB Preview - November 2022: Hike to Neutral Looks Likely

Executive Summary:

  • The South African Reserve Bank are likely to tighten policy further at this meeting, but the pace of this quarter’s increase remains up for question
  • Markets are fully priced for a 50bps move this week and are approximately 50% priced for a 75bps step
  • A sizeable minority voting for smaller hikes could indicate that the front-loading phase of the cycle has now ended
Full preview including summary of sell-side views here:


Markets are already well priced for a sharp slowing in the pace of the tightening cycle next year, with the JIBAR-FRA spread compressing across 2023 and 2024 maturities, and it’s likely Kganyago leans into this pricing to outline the SARB view that inflation will slow next year, albeit alongside a more moderate pace of economic growth.

Feeding into this view is the expectation that the rise in CPI will have faded over October (data due November 23rd) to 7.4% Y/Y, while core CPI slows to 0.3% on the month – well below the rolling 12-month average. Additionally, fuel price gains are seen slowing into year-end, with CEF estimates pointing to a slower rise for petrol, and a fall in price for diesel for December.

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