A 50 basis points repo rate seems the most likely when the Monetary Policy Committee of the South African Reserve Bank meets on Thursday.📈 InflationRate TheCitizenBusiness
A 50 basis points repo rate seems the most likely when the Monetary Policy Committee of the South African Reserve Bank meets on Thursday. Some economists were favouring a smaller increase of only 25 basis points, but that dream has been scuppered by the rand falling during the past week to trade at R19.24 on Monday afternoon.
The weaker currency will have adverse price impacts, the BER says, but points out that fortunately, in the very near term, the pass-through of the currency sell-off to domestic inflation is muted by subdued international oil prices although it started increasing last week.
Besides the repo rate decision on Thursday, ongoing rolling blackouts and any further developments on the US-SA diplomatic front, the release of the April inflation rate on Wednesday will also be in focus. Secondly, he says, while the March surprise in inflation was due in large part to the food component, Schroder’s leading indicator suggests that it should now be around its peak. This implies that food inflation will fall by about 10 percentage points by the end of the year. Food makes up about a fifth of the inflation basket and therefore, this could knock about 2 percentage points off headline inflation in the second half of this year.
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