SARB kept interest rates unchanged

As expected, South Africa central bank kept rates unchanged at +6.75%.

  • The decision to keep policy steady was unanimous.
  • The MPC considers monetary policy to be moderately accommodative
  • Overall risks to inflation remain tilted to the upside
  • Economic challenges are structural, with access risks to be to the downside
  • Policymakers cut its inflation forecasts, adding that inflation expectations have reduced since the previous monetary policy meeting
  • SARB’s model shows implied rate path is for one +25 bps hike to +7.00% by end 2021 – prior the central bank model saw four-rate hikes of +25 bps by end 2020
  • SARB does not automatically follow the Quarterly Projection Model (QPM), which is viewed as an ‘extra’ member of the MPC
  • USD/ZAR – The South African rand has fallen after the rate announcement. Prior to the release, many were expecting SARB to sound more ‘hawkish’ before the rate decision given the inflation increase in November. USD/ZAR has rallied to around $13.80, from $13.75 before the decision.

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    Dean Popplewell

    Dean Popplewell

    Vice-President of Market Analysis at MarketPulse
    Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
    Dean Popplewell