Visiting professor at the Wits Business School Prof. Jannie Rossouw said he was shocked by the ANC asking the minister to talk to the South African Reserve Bank (Sarb) about not increasing the reporate. Read more here 👇
The Bureau for Economic Research says the latest inflation data at the Sarb’s disposal is likely to show a further notable annual moderation in headline consumer price pressure, thanks to the petrol component falling into annual deflation and, although remaining high, a projected further easing in the annual rate of increase for the food category.
“We forecast one last rate hike of 25 basis points in this cycle for next week’s meeting. Although we still believe that the Sarb did enough to tame inflation and facilitate a sustainable decline towards the target range, we suspect that the MPC will err on the side of caution. “If the MPC hikes the repo rate by another 25 basis points, monetary policy will become highly restrictive. Based on our inflation forecast, which is not far off Sarb’s estimates, the real repo rate will jump to over 3% in July, climbing to around 3.5% by year-end, well above the Sarb’s real neutral rate of around 2.5%.”Sign of aggressive tightening
Although food inflation remained high, the unit says it slowed noticeably to 12% from a peak of just over 14% in March.
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