FXStreet (Edinburgh) – Strategist at TD Securities Paul Fage assessed today’s decision by the SARB to hike rates by 25 bp.
Key Quotes
“Today the SARB hiked its benchmark repo rate by 25bps to 6.0%. The consensus was fairly evenly split between those expecting no action and those expecting a 25 bps hike, with the balance slightly in favour of the latter”.
“The key to today’s move was that the SARB’s revised forecasts see inflation breaching the top of the target range in the first half of next year by more and for longer than previously expected. The MPC is concerned about inflation expectations becoming entrenched at higher levels”.
“Even after today’s hike the MPC regards policy as being supportive of the economy”.
“Any future rate moves will be data dependant. We think that the SARB may hike at the September meeting if a Fed rate hike causes the rand to weaken significantly. Otherwise we expect the next hike in November”.
(Market News Provided by FXstreet)