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SARB to keep hiking rates as price pressures persist, predicts BNP Paribas SA

 

SARB to keep hiking rates as price pressures persist, predicts BNP Paribas SA
25-01-22 / Staff Writer

SARB to keep hiking rates as price pressures persist, predicts BNP Paribas SA

Johannesburg - We expect the South African Reserve Bank (SARB) to hike its policy rate by another 25bp at its meeting on Thursday, with MPC members less split on the decision than they were for November’s hike.

Rising inflation risks are likely to see the SARB revise up its 4.3% CPI inflation forecast for 2022, closer to our 5.1% projection.

However, some downside risks to growth have materialised. This could limit the spike in the bank’s quarterly projection model implied path for the repo rate.

We continue to expect a cumulative 125bp of rate hikes in 2022, which is more than the Reuters analyst consensus, but much less than the 220bp of hikes priced in by the market.

Commentary by Jeff Schultz - Senior Economist, BNP Paribas South Africa.

 

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