South Africa Monetary Policy November 2018

South Africa

South Africa: SARB hikes rates in November

November 22, 2018

At its meeting ending on 22 November, the Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB) opted to close the year by raising the repurchase rate by 25 basis points to 6.75%. Analysts’ views had been split over whether policymakers would hold tight in their last meeting of the year. Policymakers, meanwhile, were also divided over the decision, with three committee members voting in favor and three against the November hike.

Although prices pressures have undershot analysts’ forecast in recent months, inflation expectations through the first half of next year were revised upward and gave officials’ enough ammunition to justify a hike despite languishing growth prospects. The decision appeared preemptive, intended to avoid elevated inflation over the longer-term—and to keep it within the SARB’s 3.00%–6.00% target as the rand struggles to sustain recent gains amid volatility in emerging markets.

Looking ahead, the MPC made clear that further rate hikes are on the table should inflation act up, a plausible scenario given the recent volatility of the rand. Moreover, the Bank expects the repurchase rate to reach 7.50% by the end of 2020. That said, their hawkishness stands in contrast to sluggish growth prospects. Some FocusEconomics panelists, therefore, see officials delaying the next rate hike until March or beyond in hopes of stirring up economic activity, while Consensus does not expect the SARB to deliver on all its planned rate hikes over the next couple of years.

The MPC’s next meeting will be held on 15–17 January.

FocusEconomics panelists participating in the Consensus Forecast see the repurchase rate ending next year at 6.87% and 2020 at 7.00%.


Author:, Economist

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South Africa Monetary Policy Chart


South Africa Monetary Policy November 2018

Note: Monetary Policy Rate in %.
Source: South African Reserve Bank (SARB).


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