Something to note: 3 members of the MPC voted in favor of the 25 bps hike while 2 preferred a 50 bps hike. With only 5 decision makers we very easily could have been reporting a 50 bps hike today.
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Headline inflation is anticipated to breach the Bank’s 3-6% target band in Q2 2022 at 6.2% before dropping back in line in Q3 at 5.7%. It appears the bank is looking to get a handle on inflation and avoid the numbers witnessed in the US (7.9%) and UK (6.2%) – anticipated to rise higher.
Stronger revised growth in 2021 and higher commodity export prices this year has led the SARB to revise its GDP forecast upwards, from 1.7% to 2%.
Furthermore, 1.9% GDP growth is anticipated for 2023 and 2024 respectively.
Iron ore, platinum and gold prices – while lower towards the end of last year have helped strengthen the currency this year.
Inflation forecast to average 5.8% in 2022, up from 4.9% forecasted in the January meeting; and 3.0% in 2023
Current trade surplus to increase to 3% of GDP in 2022.
USD/ZAR drops after the announcement.
USD/ZAR 5-Minute Chart
Source: TradingView, prepared by Richard Snow
The daily chart highlights the ZAR strength in the leadup to the announcement, buoyed by higher commodity prices.
USD/ZAR Daily Chart
Source: TradingView, prepared by Richard Snow
— Written by Richard Snow for DailyFX.com
Contact and follow Richard on Twitter: @RichardSnowFX
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