South Africa Consumer Prices (Jun.)

South African inflation edged up to 2.2% y/y in June and, while it will rise further over the coming months, it is likely to stay close to the lower bound of the central bank’s (SARB’s) target range. The SARB appears to be approaching the end of its easing cycle, but with inflation and the economy likely to be weaker than the Reserve Bank’s current forecasts, we still think that a few more rate cuts lie in store.
Jason Tuvey Senior Emerging Markets Economist
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Africa Economics Update

CBN remains fixated on supporting the recovery

The Central Bank of Nigeria (CBN) kept its benchmark rate on hold at 11.50% today as it shrugged off the unexpected rise in inflation in December and maintained its focus on supporting the recovery. We think that the current accommodative policy stance is unlikely to change in the coming months, but rate hikes will probably come onto the agenda in the second half of 2022.

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Africa Data Response

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Emerging Europe Economics Update

Turkey’s inflation risks mount, CBRT to delay rate cuts

Turkish inflation hit a two-year high in June and recent domestic energy price hikes will cause it to rise even further over the next couple of months. High inflation and signs of a quick recovery from May’s lockdown mean that the central bank will probably delay the start of its easing cycle until later this year. We now expect the one-week repo rate to be lowered to 17.00% by end-2021 (previously 14.00%).

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Emerging Europe Data Response

Turkey Consumer Prices (Jun.)

The fresh rise in Turkey’s headline inflation rate to 17.5% y/y in June, coupled with signs of a strong rebound in activity after May’s three-week lockdown, means that an interest rate cut in the next couple of months is increasingly unlikely. An easing cycle is now more likely to commence later this year when inflation looks set to fall sharply.

5 July 2021

Emerging Europe Economics Weekly

Turkey dollarisation, Ukraine-IMF, Russia & Poland rates

Turkey’s central bank took steps this week to tackle deposit dollarisation in the banking sector, although these efforts will fail to make headway in the absence of a stronger commitment to rein in high inflation. Meanwhile, Ukraine’s government still has work to do to secure the next tranche of its IMF loan, but the economy can muddle through without help from the Fund for some time. Finally, other developments this week suggest that Poland’s central bank may stick to its recent dovish rhetoric while Russia looks like it could accelerate the pace of monetary tightening.

2 July 2021
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