SARB - South African Reserve Bank

SARB - South African Reserve Bank

25-NOV-2022

SARB REVIEW: The SARB hiked its repo rate 75bps to 7%, as expected, albeit via a 3-2 split decision with the two dissenters preferring a 50bps hike. Alongside the release, the SARB issued its updated forecasts, where it cut 2022 GDP growth to 1.8% (prev. 1.9%), 2023 to 1.1% (prev. 1.4%), and 2024 to 1.4% (prev. 1.7%) citing high inflation, weak economic activity and the Russia/Ukraine war, amongst other factors. For this year, it maintained forecasts for growth at 0.4% in Q3, and only 0.1% in Q4, mainly due to record load-shedding. On the inflation front, core CPI is seen unchanged at 4.3% in 2022, but 2023 is higher than the previous at 5.5% (prev. 5.4%), while 2024 and 2025 are also unchanged at 4.8% and 4.5%, respectively. For headline figures, it is forecast at 6.7% for 2022, 5.4% for 2023, and 4.5% for 2024/2025, while it sees inflation reverting to mid-point of the target range by Q2 2024 as in Q2 it breached the upper end, and is likely to remain there until Q2 2023. In commentary, the SARB said risks to the inflation outlook are assessed to the upside despite the easing of global producer price and food inflation.