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South Africa: SARB to keep its policy rate on hold at 6.75% - TDS

Paul Fage, senior emerging markets strategist at TD Securities, suggest that they see little reason for the SARB’s MPC to do anything at Thursday's (17 January) meeting and in line with the unanimous consensus, they expect the MPC to keep its policy rate on hold at 6.75%.

Key Quotes

“We expect the tone of the MPC statement to be broadly unchanged. The inflation forecasts probably will not be changed much - if anything they may be lowered slightly. However, the MPC will probably continue to see the risks to the longer-term inflation outlook as being to the upside.”

“After all, in an election year political risks to the rand abound. And if growth does not pick up significantly in 2019 the fiscal outlook is likely to worsen with the risk of a Moody's downgrade.”

FX: If, as we and the unanimous consensus expect, there is no change in rates then we expect little movement in USDZAR. We think it is also very likely that the MPC will maintain their view that the risks to the longer-term inflation are to the upside.”

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