Economists expect the Reserve Bank to increase interest rates on Thursday at its Monetary Policy Committee Meeting.
This as inflation remains well above the target bracket of three to six percent.
However, the bank may tone down its hawkish stance as inflation begins to ease.
The bank is expected to hike lending rates by 25 or 50 basis points.
Economists warn that if inflationary pressures mount, the Reserve Bank may continue on its interest rate hike path.
The Chief Economist at Investec, Annabel Bishop, says, “Our expectation tomorrow is that the South African Reserve Bank will raise interest rates by half a percent, and that will likely be the last interest rate boot this year. However, the outlook is still uncertain, and of course, much will depend on how quickly inflation falls. If inflation shows, it’s going to come off fairly rapidly. Then we should, as I said, have reached the last interest rate hike in January. However, if we start to see inflationary pressures rise up again, this would concern the Reserve Bank, and it may look to hike further down the line.”
Reserve Bank expected to raise interest rates: