Jeff Schultz, Senior Economist at BNP Paribas South Africa

We continue to expect the South African Reserve Bank to increase the pace of policy normalisation at its 19 May meeting, hiking the policy rate by 50bp. 

While we expect the decision to be a split one (again), we expect a strong majority (4:1) to be in favour of upping the ante on hikes. 

Rising price pressures, an increased front-loading of US Federal Reserve rate hikes and recent ZAR weakness all point to a more hawkish stance, in our view. 

We maintain our above-consensus forecast for the policy rate to end the year at 5.75% and to be raised to 6.50% by mid-2023 as the SARB looks to build up room for policy manoeuvre in a highly uncertain global environment.

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