MNI SARB Review - March 2024: Hawkish Messaging
The SARB took a widely expected unanimous decision to keep interest rates unchanged at its last meeting before the upcoming elections.
Executive Summary:
- The MPC unanimously decided to keep interest rates unchanged.
- Inflation is expected to return to target mid-point only at end-2025.
- Forecast changes were marginal, but rhetoric turned a tad more hawkish.
The South African Reserve Bank (SARB) made its third consecutive unanimous decision to keep interest rates unchanged. The Monetary Policy Committee (MPC) took note of an “unwelcome” uptick in headline CPI inflation, which they are trying to bring sustainably to the +4.5% Y/Y target mid-point. The prospect of a longer return to that level, which is now expected to happen only at the end of 2025, prevented the SARB from any preliminary discussion of future rate cuts. Overall, the SARB continues to signal its determination to remain hawkish until inflation trends at or below the mid-point of the official target band.