SARB signals high bar for additional rate hikes

The South African Reserve Bank’s (SARB’s) surprise decision to keep its policy rate on hold (rather than hike) today suggests that the MPC isn’t as hawkish as we had thought, and our base case now is that the rate pause lasts until early next year. That is followed by gradual monetary easing as inflation falls back to the 3% target. But this view is premised on energy flows through the Strait of Hormuz resuming within a relatively short time frame; without that the MPC will have little choice but to deliver a few more hikes.