MNI SARB Review - September 2021: SARB More Cautious on S/T CPI Risks, No Hikes Seen in 2021

Executive Summary

• Rates left unchanged at 3.5% (as expected), Unanimous decision, QPM model broadly ignored
• Inflation: End-2021 headline CPI revised higher to 4.3% vs 4.2% prior, core higher to 3.0% vs 3.0% prior. 2022 & 2023 average inflation kept steady at 4.2% & 4.5% respectively
• 2021 Growth Forecast raised to 5.3% vs 4.2%, bolstered by the recent GDP rebasing, while 2022 GDP was revised lower to 1.7% from 2.3% & 1.8% in 2023 from 2.4%
• No material change in phraseology, with Kganyago still alluding to short-term risks to the outlook being tilted to the upside – but sounding somewhat more concerned to temper the rest of the broadly dovish factors in the reaction function

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SARB Review 24.09.pdf

Overall, a broadly cautious meeting from Governor Kganyago – highlighting short-term risks to the pricing forecast into year-end but reaffirming the SARB's commitment to look through transitory factors towards broadly balanced medium-term disinflationary factors. As we expected, the decision to hold was unanimous, with Kganyao tempering dovish factors with concerns of food, oil, wage and producer prices developing above the SARB's forecasts into year-end.