SARB likely to cut its policy rate by 25bps – TDS

In line with the consensus, analysts at TD Securities are expecting the SARB to cut its policy rate by 25bps today to 6.5%.

Key Quotes

“In our view a cut would be justified for a number of reasons. Inflation remains low and below the SARB’s projections. May CPI stood at 4.5%, a bit higher than April’s 4.4%, but still in the middle of the 3-6% target range.”

“Since the last MPC meeting on 23 May the rand is 2.5% stronger on a trade-weighted basis, while Brent crude is down 5% in $ terms. And to cap it all, since the last MPC meeting, monetary policy in the US and the Eurozone has moved in a distinctly more dovish direction – TD now expects easing from both the Fed and ECB this year.”

“We expect the message from the SARB to be moderately dovish, suggesting another cut remains in the pipeline and could be delivered in September, provided data and financial conditions allow.”