SARB - South African Reserve Bank

26-MAY-2023

SARB REVIEW: The South African Reserve Bank raised its repo rate by +50bps to 8.25%, higher than the +25bps consensus view, citing concerns about inflation due to ongoing power cuts. Although the central bank sees balanced risks to the domestic outlook, it expects the ZAR currency to weaken further. GDP growth forecasts for 2024 and 2025 were left unchanged at 1.0% and 1.1% respectively. While the global growth outlook has somewhat improved, domestic economic conditions remain poor with persistent inflation and elevated financial stability risks. Some analysts argued that this month's announcement is a signal that the tightening cycle has concluded and are now looking for rate cuts later in the year. A recent Reuters poll revealed analysts predict the SARB is set to cut rates by 25bps in Q1 of 2024, followed by further rate cuts in Q3 2024.