In a surprise decision, the South African Central Bank (SARB) announced that it hiked its key rate by 25 basis points to 6.75%. With the initial market reaction, the USD/ZAR pair dropped more than 1% to fall to its lowest level since early August at 13.73. As of writing, the pair was trading at 13,7540, losing 1.1% on a daily basis.
“The inflation forecast has improved marginally since the previous MPC. While remaining within the inflation target range throughout the forecast period, the SARB’s model projects an increase in headline inflation, albeit slightly lower than the September projection,” the bank said in its statement.
“The global economic outlook is expected to remain broadly favourable over the short term. However, medium term risks are tilted to the downside due to less synchronised global growth. This is amplified by elevated policy uncertainty emanating from escalating trade tensions, tightening global financial conditions and rising geo-political risks.”
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