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SARB Leaves Rates Unchanged; Moderately Hawkish Presser Elicits Bear flattening

SARB
  • As expected, SARB leaves its repo rate unchanged at 3.50% today
  • FY20 GDP forecast raised to -8.0% from -8.2%, 2021 growth expected at 3.5% & 2.4% in 2022
  • 2020 average CPI lowered to 3.2% from 3.3%, 2021 average 3.9% & 4.4% in 2022
  • Gov Kganyago notes inflation and growth both balanced, with near term CPI outlook to the downside. Also cites fiscal risks holding the potential to increase FX pressures
  • Also highlights limited space to cut rates further in the absence of structral reforms from Govt and that future decisions will be data-dependent
  • Remains resolute in guidance towards two hikes in 3Q21 & 4Q21 with the SARB's repo model seeing rates at 3.97% by end 2021 & 4.88 by end 2022
  • USD/ZAR shows muted reaction to the meeting, holding above 15.50, before moving higher towards the intraday high at 15.60, while rates fade early gains in 10Y & 2Y yields - resulting in a bear flattening
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com

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