Rand Report: What Will The South African Reserve Bank Do?

Rand Report – What will the South African Reserve Bank Do?

Emerging Markets Hiking Interest Rates

In the wake of recent monetary policy tightening from emerging markets Turkey, Argentina and Russia, there has been some speculation that the South African Reserve Bank (SARB), may follow suit and hike interest rates, at the conclusion of the Monetary Policy Committee (MPC) meeting, on Thursday 20 September. The short term recovery in the rand has perhaps provided some further speculation of this outcome. A Bloomberg poll of analysts does however continue to forecast that lending rates in South Africa will remain unchanged at the meeting, although there does remain an outside chance of a 0.25% rate hike.

Inflation

The rand’s sharp weakening over the last three months, largely in sympathy with emerging market currencies, has provided some inflationary concerns, as has the rise in crude oil prices. However, Consumer Price Index (CPI) data in South Africa has seen inflation moving from 4.6% (year on year) in June to 5.1% in July, before falling back to 4.9% in August, well within the Reserve Bank’s 3% to 6% targeted range. Core inflation has remained comfortably within the targeted range coming

Article source: https://www.dailyfx.com/forex/technical/article/special_report/2018/09/20/Rand-Report-What-Will-The-South-African-reserve-Bank-Do.html