SARB to keep rates unchanged – TDS

By FXStreet FXStreet (Córdoba) – Paul Fage, Senior Emerging Markets Strategist at TD Securities expects that the South African Reserve Bank (SARB) to remain on hold on its policy rate after rising the key interest rate to 6% in July.

Key quotes:

“Tomorrow, 23 September, we expect the SARB to keep its policy rate on hold at 6.0%. This is in line with the almost unanimous consensus.”

“In its monetary policy, the SARB is having to strike a balance between the weak economy and concerns about forecast inflation for Q1 2016 moving well above the top of the 3-6% target range.”

“Since the July MPC meeting the rand has weakened by 7% on a trade-weighted basis. This will be a major concern for the SARB, although their concerns will to be somewhat offset by the fall in oil prices; Brent in rand terms has fallen by about 4.5% since the July meeting. The currency is a perennial concern to the SARB, given that South Africa is running a large CA deficit, making the rand particularly vulnerable to changes in international capital flows.”

“We think that the fact that the Fed did not hike rates last week will give the SARB the breathing space to keep …read more

Source:: FX Street