South Africa

South Africa Monetary Policy March 2019

South Africa: SARB stays put in March

At its meeting ending 28 March, the Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB) kept the repurchase rate unchanged at 6.75%. The decision, which was widely expected by analysts, was unanimous among policymakers.

Driving the call to hold off were the SARB’s inflation forecasts, which were left broadly intact since January and still see it averaging 4.8% this year (previously: 5.5%). That said, risks to the outlook now appear balanced: On the upside, utility tariffs as well as higher food and energy costs; on the downside, a slowing global economy and accommodative developed-market central banks. In light of the latter, as well as dwindling business confidence and the possibility of further load-shedding, the SARB’s growth forecasts, on the other hand, were revised to 1.3% and 1.8% this year and next (previously: 1.7% and 2.0%).

In the absence of emerging-market (EM) turmoil, policymakers continued to strike a dovish tone at their second meeting of the year. In line with the projected containment of inflationary pressures, their current models now see only one 25-basis-point hike before the end of the year. All told, most FocusEconomics panelists discount the MPC’s assurances; instead, most do not see a rate hike until late next year.

The MPC’s next meeting will be held on 21–23 May.

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