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Cape Town – There is a 70% probability of a hold in interest rate hikes at this week's meeting of the Monetary Policy Committee (MPC) of the SA Reserve Bank (Sarb), according to Nedbank’s Corporate and Investment Banking unit.
Based on an analysis the unit did, it expects Sarb to revise their Consumer Price Index (CPI) profile lower, taking into account the recent rand strength.
“The Sarb is likely to reiterate that this is a pause in a hiking cycle in our view,” said Nedbank.
Nedbank’s interest rate barometer considers certain factors influencing the decision of the MPC as stated in the statement accompanying the previous meeting's interest rate decision in July as well as developments since the previous meeting which could influence Thursday's rate decision.
Of the 13 factors analysed, two support expectations for a hike, nine factors support an unchanged stance and two factors favour a cut, according to the barometer.
“The rand and the socio-political risk premium remain key swing factors given their fluidity. Key event-risk in the form of a possible credit rating downgrade in December, combined with a Fed rate hike possibility will also have a bearing on local monetary policy decisions,” said Nedbank.
“Currently, global capital flows are proving supportive despite the bearish macro-fundamental backdrop.”
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