South African Interest Rate Decision
In the world of finance, inflation and interest rates are the hot topic of late, and there might be more rate hikes in store over 2023, according to SARB Governor Lesetja Kganyago.
The South African Annual Consumer Price Index (CPI) came in slightly hotter at 7.6% in October from 7.5% in September. This increase comes in after two successive months of declining annual inflation rates.
Despite the fuel index declining for a third consecutive month, food and non-alcoholic beverages serve as the primary contributors to the rise in annual inflation.
With the South African Reserve Bank’s mid-range inflation target of 4.5%, October’s Annual CPI figure of 7.6% is noticeably higher, leaving market participants wary regarding future interest rate decisions.
The SARB forecasts headline inflation to remain above the 6% upper inflation target band until the second quarter of 2023 and has thus maintained an aggressive stance against inflation. At the latest MPC meeting on November 24, the repurchase rate was increased by 75 basis points. This hike brings the repo rate to 7, and the prime rate to 10.5%. In the future, market participants will keep their eye on how inflation evolves and future interest rate decisions.
