Band Vuyani Ndaba
JOHANNESBURG, February 17 (Reuters) – South Africa’s Reserve Bank will step up the pace of its tightening cycle and raise its repo rate again next month to halt rising inflation, according to a Reuters poll released on Thursday, with further increases likely in the future. second and third trimesters.
Last month, the Reserve Bank implemented the first of four rate hikes economists expect for this year, raising its key policy rate by 25 basis points to 4.00%.
The latest poll showed that the repo rate should be raised again in March, then in the next quarter and reach 4.75% in July or September. In a January poll, it was not expected to reach that level until November.
Rates were due to end next year at 5.50%.
“We expect three more interest rates of 25 basis points each this year before the MPC pauses at the November MPC meeting,” said Johannes Khosa, an economist at Nedbank.
Khosa added that inflation would likely hover dangerously close to the upper 6% limit of the SARB’s target range throughout the first quarter.
“Upside risks to the inflation outlook are unlikely to fade quickly, with global supply chain bottlenecks and shortages only expected to ease in the second half of the year. ‘year,” Khosa said.
While the poll showed quarterly inflation moderating throughout the year until positive real rates are achieved at the end of the year, the consumer price index is expected to ease. average 5.0% this year, up from last month’s median of 4.8%. Inflation is then expected to slow to 4.4% next year, averaging 4.5% in 2024.
But 10 of 12 economists polled last week said the risks to their inflation outlook for South Africa were biased to the upside in the year ahead.
Standard Bank’s Elna Moolman said she was particularly concerned about upside risks to food and fuel prices, largely stemming from global price pressures, in the second half of this year. Supply shortages have fueled price pressures globally.
“However, the slow GDP recovery in South Africa and the relatively resilient rand ZAR=D3 should help counter these pressures. This should eventually allow the SARB to gradually raise interest rates,” she added.
Still, similar to forecasts for developed economies, some economists expect about six, 25 basis point hikes at each meeting this year.
Economic growth has been sluggish in Africa’s most industrialized economy in recent years, meaning fewer South Africans have been able to participate in its growth through consumption.
Growth is expected to slow to 1.9% this year after an estimated technical rebound of around 5.0% last year.
Reuters poll: outlook for inflation and monetary policy in South Africahttps://tmsnrt.rs/3oV1WMm
(Reporting by Vuyani Ndaba Editing by Chizu Nomiyama)
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