All eyes on the South African Reserve Bank(SARB) governor, Lesetja Kganyago as he is set to deliver the interest rate decision. This comes after Yesterday’s Consumer Price Index (CPI) which was in line with expectations.
In the previous repo rate decision, the SARB’s Monetary Policy Committee (MPC) unanimously kept the repo rate constant but this time around we could see a different view on whether rates should be kept constant or to make adjustments due to fears of inflation triggered by the rising fuel prices.
The UK Inflation at the highest in a decade due to energy costs (4.2% y/y VS 3.9% y/y) & strong labour data add pressure on the BoE to deliver the long flagged rate hike at the December meeting. The Federal Reserve System(FED) and Bank of England(BoE) seem to be on the same road to rate hikes sooner than many expected. The question then is, will The South African Reserve Bank follow suit?
A higher than expected reading should be taken as positive for the South African Rand , while a lower than expected reading should be taken as negative, however, If rates are hiked then you should expect to pay more for debt that is linked to the interest rate and it will cost you a little bit more to borrow money.
