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Corporate and Investment Bank
Standard Bank Group
25 May 2018

SARB holds, on upside risks

  • The SARB kept rates on hold yesterday, in line with our expectations. The MPC decision was unanimous. While the SARB’s inflation forecasts are unchanged (4.9% for 2018, and 5.2% for 2019), the bank now sees the risks as biased to the upside.
  • We concur that the inflation risks are biased upwards, given the increased pressure on the rand and on oil prices, as well as the risk of further pressure. However, we do not right now see these risks derailing the still relatively contained inflation outlook.
  • Nevertheless, the oil price and currency movements, being inflationary, have not only increased the inflation risks but also diminish the chances of a material further retreat in inflation expectations — which would impede any further monetary easing this year (see Steady MPC, as expected of 24 May, by Elna Moolman).

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