Something to note: 3 members of the MPC voted in favor of the 25 bps increase while 2 voted for a 50 bps increase. With only 5 decision makers, we could very easily have reported a 50 bps increase today.
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Headline inflation is expected to exceed the Bank’s target band of 3-6% in the second quarter of 2022 at 6.2% before falling back to Q3 at 5.7%. It appears the bank is looking for a grip on inflation and avoiding the figures seen in the US (7.9%) and the UK (6.2%) – which are expected to rise higher.
Stronger revised growth in 2021 and higher commodity export prices this year led the SARB to revise its GDP forecast upwards, from 1.7% to 2%.
Furthermore, 1.9% GDP growth is expected for 2023 and 2024 respectively.
Iron ore, platinum and gold prices – while lower at the end of last year – helped strengthen the currency this year.
Inflation is forecast to average 5.8% in 2022, up from 4.9% predicted at the January meeting; and 3.0% in 2023
Current trade surplus will increase to 3% of GDP in 2022.
USD / ZAR declines after the announcement.
USD / ZAR 5-Minute Chart
Source: TradingView, prepared by Richard Snow
The daily chart highlights the ZAR strength in the run-up to the announcement, driven by higher commodity prices.
USD / ZAR Daily Chart
Source: TradingView, prepared by Richard Snow
— Written by Richard Snow for techlives.in
Contact and follow Richard on Twitter: @RichardSaowFX
