Sign in
Research link-chevron Created with Sketch.
link-chevron Created with Sketch. Products and Services link-chevron Created with Sketch.
link-chevron Created with Sketch. Products and Services
Economics link-chevron Created with Sketch.
FX Report
The Loop
Inside China
Insights & Strategy
Equities link-chevron Created with Sketch.
Corporate Commissioned Research
Analysts
Analysts
Help and Support
Help and Support
Corporate and Investment Bank
Standard Bank Group
The SA Daily 13 November 2018

Financial conditions tight

  • Financial conditions as captured by the financial conditions index (FCI) are important as it serves as a leading indicator for near-term economic activity. The SA Standard Bank financial conditions index (FCI) showed a further deterioration of financial conditions in September to -0.94 from -0.6 in August, despite accommodative monetary policy. This takes the FCI to an average of -0.71 in Q3:18 from -0.28 in Q2:18.
  • Continued tightening of financial conditions would negatively affect growth via the impact on savings and investment plans of households and companies. From a monetary policy perspective, tighter financial conditions supports our view that the South African Reserve Bank (SARB) will likely not raise rates at its upcoming meeting next week especially given its in-target inflation projections and an already weak growth environment.
  • Looking ahead, our view is that financial conditions will remain tight over the near term due to the weaker rand, elevated global oil prices, and stock market volatility because of rising risk aversion (see our reports FCI further down of 31 October and Tighter and tighter of 09 November, by Thanda Sithole).

Read PDF