SARB cautious, but still scope for further easing

Divisions on South Africa’s MPC suggest that some policymakers are keen for the easing cycle to be brought to an end following today’s 25bp cut (to 3.50%). And that seems to be the view priced into markets. Even so, with growth and inflation likely to be weaker than the Reserve Bank’s current forecasts, we still see scope for a few more rate cuts over the rest of this year.
William Jackson Chief Emerging Markets Economist
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Africa Economics Weekly

Balance on South African MPC tipping towards rate hike

A raft of recent economic developments have shaken up our near-term views on monetary policy in South Africa, and we now expect a 25bp rate hike at next week’s MPC meeting. However, our forecasts for the next 12-18 months are still more dovish than most investors'.

21 January 2022

Africa Data Response

South Africa Activity Data (Nov.)

November’s hard activity data suggest that South Africa’s economy performed strongly in the middle of Q4 and the early evidence is that the latest Omicron-driven virus wave inflicted only minimal economic damage last month. But even so, the recovery this year will remain stuck in the slow lane.

19 January 2022

Africa Data Response

South Africa Consumer Prices (Dec.)

South Africa’s inflation rate rose to a stronger-than-expected 5.9% y/y in December, probably tilting the Reserve Bank more in favour of continuing to tighten monetary policy. But with soft core price pressures and an Omicron-driven virus wave clouding the recovery, this month’s decision is likely to be a close call. Further out, we think that interest rates will rise more slowly than investors currently expect.

19 January 2022

More from William Jackson

Emerging Europe Data Response

Russia Consumer Prices (Jun.)

The further rise in Russian inflation to a stronger-than-expected 6.5% y/y in June means the central bank (CBR) is likely to up the pace of tightening when it meets in a couple of weeks. A 75bp hike (to 6.25%) seems most likely, but the probability of an even larger 100bp hike has risen.

7 July 2021

Emerging Markets Economics Update

EM credit growth: where do the risks lie?

With the (usual) exception of Turkey, the strong rates of credit growth seen in some EMs including Brazil and Korea are unlikely to be sustained as policymakers have already started (or will soon turn to) tightening policy. The bigger concern is the extreme weakness of credit growth in other EMs such as Mexico and the Philippines, which threatens to further hold back economic recoveries.

6 July 2021

Latin America Data Response

Brazil Industrial Production (May)

The 1.4% m/m rise in Brazilian industrial production in May only partially reversed the falls in output in the three preceding months. And while surveys point to a stronger reading in June, the sector was probably a drag on q/q GDP growth over Q2 as a whole.

2 July 2021
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