Week Ahead: SARB likely to lower its CPI inflation projections at next week’s MPC meeting

11 Jan 2018

Annabel Bishop

Chief Economist

but still retain a cautious policy stance and keep rates at 6.75%

Figure 1: SA Monetary Policy Committee (MPC) meeting dates for 2018

Currency outlook for the week ahead and foreign portfolio flows:

Figure 2: Purchasing price parity value of the rand
Compared to last Friday’s levels of R12.34/US$, the rand is little changed at R12.39/US$ at the end of this week, having depreciated by just 0.6% over the last five days. The rand remained sensitive to political newsflow and this is likely to remain the case next week when markets will digest the ANC’s January 8 statement, to be delivered tomorrow. Guidance will be sought on policy going forward, particularly in terms of fiscal policy and radical economic transformation. This week the US$ came under some pressure as the euro appreciated to a three year high after the ECB’s December minutes were interpreted as more hawkish and the formation of a coalition government in Germany.
In the week ahead, the rand is expected to trade in a range of R11.90/USD – R12.90/USD, R14.50/EUR - R15.50/EUR and R16.40/GBP - R17.40/GBP.
Figure 3: Purchasing price parity value of the rand

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