South Africa: SARB continues to tighten policy aggressively in November
At its 24 November meeting, the Monetary Policy Committee of the South African Reserve Bank (SARB) increased the repurchase rate by a further 75 basis points, bringing it to 7.00%. The move, which came on the heels of Septembers same-size increase, had largely been priced in by markets. The decision regarding the size of the hike—the seventh consecutive increase since November 2021—was once again contested: Two of the five members preferred a 50 basis point increase.
The move was driven by the Banks assessment that risks to the inflationary outlook remain skewed to the upside. The SARB sees headline inflation returning to its 3.0–6.0% target band in H2 2023, but still upwardly revised its headline inflation forecasts for 2022 and 2023 to 6.7% and 5.4%, respectively, amid higher price expectations for local food and electricity. Additionally, core inflation forecasts for 2023 were also upwardly revised to 5.5%.
With regard to future policy moves, the SARBs tone remained hawkish but vague. It reiterated its commitment to stabilize and anchor inflation expectations around the midpoint of its target range. Meanwhile, the Bank noted that “economic and financial conditions are expected to remain more volatile for the foreseeable future,” and that, therefore, “monetary policy decisions will continue to be data dependent and sensitive to the balance of risks to the outlook”.
The next monetary policy meeting is scheduled for 24–26 January 2023.