MNI SARB Review - May 2024: Broadly Balanced Inflation Risks

Executive Summary:

• The SARB left interest rates unchanged, as expected.
• Inflation risk assessment changed from “upside” to “balanced.”
• The central bank sees faster return to target mid-point.

MNI SARB Review - May 2024.pdf

The South African Reserve Bank (SARB) left interest rates unchanged in a unanimous vote but struck some optimistic notes on the inflation outlook. The central bank expects inflation to return to the target mid-point of +4.5% Y/Y somewhat faster and changed its assessment of risks to the inflation outlook to “broadly balanced,” dropping a well-established view that they were tilted to the upside. On the other hand, the SARB flagged concern about elevated inflation expectations, pointing to the need to deliver on the target “sooner rather than later.”