SARB expected to hold rates steady amidst inflationary pressures

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The South African Reserve Bank (SARB) is expected to maintain its current repo rate of 8.25% when it announces its monetary policy decision at 3pm today.

This decision comes despite a recent surge in inflation, which spiked to 5.9% in October, exceeding market expectations.

Senior Economist at Econometrix, Laura Campbell, says there are a number of reasons to support a hold on rates despite the unexpected 5,9% jump in inflation in October 2023.

These factors include declining oil prices, rand appreciation, the US Federal Reserve’s steady interest rates, the lag effect of interest rate changes, balancing inflation and growth.

Campbell says, “Despite the rise in headline inflation in October, we continue to expect that the SARB will leave interest rates unchanged because oil prices have declined after all – despite geopolitical turmoil in the Middle East and inflation of fuel will decline in November and possibly in December, with a fuel cut on the cards and looking increasingly likely for that month.”

“There’s also been some rand appreciation since the SARB last met, and then finally in the US in particular, they kept interest rates steady, and this reduces pressure on the SARB to follow suit to raise interest rates in order to keep rand investments attractive,” adds Campbell.

South African Reserve Bank to make interest rates announcement: