SARB keeps rates steady, cuts GDP outlook, unlikely to hike anytime soon

The South African Central Bank (SARB) kept interest rates steady and cut their economic growth outlook all the way to 2021.  The unanimous decision to keep rates steady at 6.75% was widely expected.  The MPC noted that they continue to asses the stance of monetary policy to be accomodative.

The MPC maintained their inflation forecasts for 2019 at 4.8% and 2020 at 5.3% and trimming 2021 from 4.8% to 4.7%, which are all within the Bank’s 3.0-6.0% target range.

The monetary policy statement noted, “Since the January MPC, the rand has depreciated by 6.4% against the US dollar, by 5.2% against the euro, and by 6.1% on a trade-weighted basis. The implied starting point for the rand is R14.00 against the US dollar, compared with R14.30 at the time of the previous meeting. At these levels, the QPM assesses the rand to be less undervalued.”

While the SARB’s Quarterly Projection Model still sees the chance of a 25 basis hike before the end of the year, it will be difficult them to hike with risks to the growth forecast continuing to be on the downside.

Following the decision and press conference, the rand was lower to the dollar by 0.3%, mainly having some contagion pressures stem from Turkey.  The SARB keeps the door open for a hike later this year and we could see the rand rally once we see the dust settle in Turkey and if we see global growth concerns ease in the coming months.



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Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya