South Africa: rates on hold despite Fed surprise

The South African Reserve Bank (SARB) left rates on hold today and gave no indication that any change was likely in the foreseeable future. Growth remains below trend, but policymakers expect inflation to remain towards the upper end of the target range over the next year. Meanwhile, Governor Marcus suggested that any respite for the rand following the Fed’s decision to delay QE tapering was likely to prove temporary. The SARB’s hands are tied. We expect rates to remain on hold for at least the next year.