South Africa: SARB to keep rates unchanged – TDS

Analysts at TD Securities are expecting the SARB to keep rates unchanged at 6.50%.

Key Quotes

“It is a very close call, but on the balance we believe that hold is more likely on the basis of macro financial stability risks related to a possible downgrade to junk by Moody's. However, consistently low inflation is supportive of a cut.”

“The last inflation print came out at 3.6% y/y in November, which is quite significantly below the 4.5% mid-point of the inflation target (3-6%). If the SARB holds, USDZAR is likely to move slightly lower 0.2%. If the SARB cuts, we expect ZAR weakness, with USDZAR moving 0.4% higher.”