The South Africa Reserve Bank held it repo rate at 6.75% again today as it made clear that it will look through the initial energy price shock. For now, so long as the war ends in the coming weeks as we assume under our baseline scenario, interest rate cuts towards the end of the year still appear on the cards. But in the event of a longer conflict and higher energy prices that triggers concerns about second-round effects on inflation, the SARB would probably move quickly to hike interest rates.
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