Economists see no wavering from the Reserve Bank when it comes to following its aggressive rate hike path.
South Africa’s central bank is poised to prolong its most aggressive interest-rate hiking cycle in at least two decades on Thursday, underlining its commitment to tame stubbornly high inflation even as the economy flirts with recession.
“If headline and core are upside surprises, it suggests that you’ve just got more inflation persistence,” said Gina Schoeman, an economist at Citibank South Africa. The South African Reserve Bank will now be even more concerned about the second-round effects of inflation, she said. Breakeven rates, which signal expectations for inflation, have plunged, though, with the five-year gauge at 5.27% — close to the lowest level since February.
Complicating the calculus for Governor Lesetja Kganyago are concerns about economic growth — there’s a chance the economy may have slipped into recession in the third quarter — and the worsening global prospects. South Africa’s record power outages this year have added to domestic risks.
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