Wednesday, September 23, 2015

SARB to remain on hold – TDS

FXStreet(Delhi) – Paul Fage, Senior Emerging Markets Strategist at TD Securities, expects SARB to keep its policy rate on hold at 6.0%, in line with the almost unanimous consensus.

Key Quotes

“Since the July MPC meeting the rand has weakened by 7% on a trade-weighted basis. This will be a significant concern for the SARB, although the inflationary impact will be to some extent offset by the fall in oil prices.”

“Recent economic activity data has shown some improvement, but sentiment indices are at low levels. Precious metal prices remain depressed.”

“In its monetary policy, the SARB is having to strike a balance between the weak economy and concerns about forecast inflation for Q1 2016 moving well above the top of the 3-6% target range.”

“We think the Fed not hiking last week has given the SARB some breathing space and that they will keep rates on hold tomorrow. We see a risk of a 25 bps should the SARB significantly upward revise its Q1 2016 inflation, but we do not expect this.”
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