SARB interest rate decision this week: what to expect

Tracey

CAPE TOWN – According to FNB’s Chief economist Mamello Matikinca, there is a fair amount of data out this week. The most important market event of the week will be the first interest rate decision of the years of the Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB). This will take place on Thursday.

According to Matikinca, FNB has a view that the MPC meeting is unlikely to deliver any surprises.

FNB is expecting the MPC meeting to see “a more balanced tone with a slight bias towards upside inflationary risks”. The bank expects grates to remain unchanged. “Despite inflation being well contained and a strengthening currency, we believe there are too many risks over the medium term to spur the committee to move in either direction,” Matikinca.

 She also pointed out that ratings agency Moody’s is due to announce their latest decision on SA’s sovereign credit rating, which is currently on review for downgrade.

“Should the budget disappoint, a downgrade would see significant portfolio outflows, greater difficulty in funding the current account deficit, a weaker currency and inflationary concerns,” Matikinca said.

FNB is expecting the MPC to highlight the risk of a wage price spiral should the public sector wage negotiations not conclude more or less in line with inflation.

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