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ZAR: SARB on hold rates, waiting to see what the Fed does - TDS

FXStreet (Delhi) – Paul Fage, Senior Emerging Markets Strategist at TD Securities, suggests that at Thursday’s MPC meeting (19 November) we expect the SARB to keep its policy rate on hold at 6.0%.

Key Quotes

“The consensus is also for no change in rates, but a significant number of respondents to the Bloomberg survey (10 out of 26) expect a 25 bps hike.”

“Since the September MPC meeting the rand has weakened by about 3% on a trade-weighted basis. The continued weakness of the rand is a concern for the SARB, although the inflationary impact is to some extent offset by the fall in oil prices.”

“In its recent monetary policy actions the SARB is having to strike a balance between the weak economy and inflation risks which its sees as being skewed to the upside.”

“This rate decision is a tough call, but we think that the SARB has little to lose by waiting to see what the Fed does in December (we expect a 25 bps hike) before acting. We expect a 25 bps hike from the SARB in January.”

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