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TD Securities analysts suggest that in line with the unanimous consensus, they expect the policy rate to be kept on hold at 6.75% at today’s MPC meeting of SARB.

Key Quotes

“With headline (4.4% y/y) and core (4.1% y/y) CPI inflation in April both below the center of the 3-6% target range, we think the SARB will remain neutral-to-hawkish for now.”

“There are many compelling political issues to be resolved after the 8 May general elections and these developments may move the market in either direction, with potentially marked implications for monetary policy. However, for the last couple of meetings, the SARB has continued to adjust its inflation projections lower, which suggests a softening of its rhetoric.”

“We think this trend may continue today and for the following two-three meetings, but that the MPC will fall just short from easing any time soon. As inflation rises later this year, we still believe that rate hikes are more likely than cuts in 2020 “” a view that may be subject to revisions pending the announcement of government reforms in the coming months and a crucial rating review by Moody’s on 1 November.”