South Africa: SARB to keep its policy rate on hold - TDS

In line with the unanimous consensus, analysts at TD Securities expect the SARB to keep its policy rate on hold at 6.5% today.

Key Quotes

“Since the May MPC meeting the news on the inflation front has been mixed. Actual CPI inflation prints have been better than the SARB was expecting in May. Headline inflation averaged 4.5% in Q2 and core averaged 4.4%, below the May SARB forecasts of 4.9% and 4.6%% respectively.”

“On the other hand, since the May meeting the rand has weakened by about 6% against the US dollar and by about 4% on a trade-weighted basis. That said, the MPC can take a bit of comfort from the fact that global oil prices have weakened and that, in rand terms Brent crude is slightly down, by about 2%.”

“Still, we think the overall tone will be one of caution with the MPC concerned, among other things, about the possibility of further rand weakness resulting from adverse global developments.”