SARB: Hawkish caution loading

Jeff Schultz – Senior Economist, BNP Paribas South Africa

We expect the SARB to unanimously raise the policy rate by another 25bp on 24 March. 

The decision, statement, and tone are likely to strike a more hawkish tone, though at the same time acknowledge a high degree of uncertainty. 

Higher inflation projections and adjustments to the interest rate gap model due to higher G3 rate hike assumptions means that the central bank’s QPM is very likely to imply a faster pace of hikes compared to its January estimates. 

Though a 50bp hike is unlikely to be delivered, we do not rule this out from May depending on the evolution of oil and food prices and their imminent second round impacts on expectations.

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