Weak core inflation pressures in South Africa mean that the Reserve Bank is less likely to rule out monetary easing in the face of the energy price shock than most other EM central banks. If the conflict in the Middle East is short-lived, the repo rate could still fall to around 5.75% (from 6.75% now) but it would take longer to get there than we previously thought. Even if the conflict is longer lasting, there might be scope for rate cuts by 2027. It would probably require oil prices to breach $100pb accompanied by expectations for long-lasting disruptions to global energy markets for the SARB to hike rates.
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