Share

SARB interest rate decision this week: what to expect

Cape Town - There is a fair amount of data out this week, according to FNB's chief economist Mamello Matikinca.

The most important market event of the week will be the first interest rate decision of the new year of the Monetary Policy Committee (MPC) of the SA Reserve Bank (SARB). It takes place on Thursday.

According to Matikinca, FNB's view is that the MPC meeting is unlikely to deliver any surprises.

FNB expects the MPC meeting to see "a more balanced tone with a slight bias toward upside inflationary risks". It expects rates to remain unchanged.

"Despite inflation being well contained and a strengthening currency, we believe there are too many risks over the medium term to spur the committee to move in either direction," she said.

"Firstly, the oil price has surged, presenting upside risk to the inflation profile. Secondly, the February budget could deliver significant tax hikes and expenditure cuts in an effort to fund free higher education and provide fiscal support for ailing state-owned enterprises (SOEs), all of which need to be budget neutral."

She pointed out that ratings agency Moody’s is also due to announce its latest decision on SA's sovereign credit rating, which is on review for downgrade.

"Should the budget disappoint, a downgrade would see significant portfolio outflows, greater difficulty in funding the current account deficit, a weaker currency and inflationary concerns," said Matikinca.

FNB expects the MPC to highlight the risk of a wage price spiral should the public sector wage negotiations not conclude more or less in line with inflation.

Other releases

November mining production will be released on Tuesday, while November retail trade sales are out on Wednesday.

Civil cases for debt, motor and wholesale trade and building statistics - all for November - are scheduled for Thursday.

The SA Reserve Bank’s (SARB) Monetary Policy Committee (MPC) will also hold their first meeting of 2018 this week.

"Despite global appetite for iron ore and coal remaining robust, and a very low November 2016 base, we expect a slight moderation in mining output relative to October ’s very strong 5.2% year/year," Matikinca said.

As for retail sales, she said these are likely to show very strong growth for November, given Black Friday sales. This will add to the strong growth the sector has shown for the fourth quarter so far.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
19.05
-0.7%
Rand - Pound
23.98
-0.3%
Rand - Euro
20.55
-0.4%
Rand - Aus dollar
12.36
-0.1%
Rand - Yen
0.13
-0.7%
Platinum
894.10
-0.3%
Palladium
996.00
-0.6%
Gold
2,193.32
-0.1%
Silver
24.41
-1.0%
Brent Crude
86.09
-0.2%
Top 40
67,889
+0.3%
All Share
74,074
+0.2%
Resource 10
56,132
+0.9%
Industrial 25
103,554
+0.3%
Financial 15
16,492
-0.2%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders