Moneyweb reports that SA’s consumer inflation rate held steady near the ceiling of the SA Reserve Bank’s target range on the eve of what is expected to be the biggest interest-rate hike in more than six years.

While the bank officially targets inflation in a band of 3% to 6%, its monetary policy committee (MPC) prefers to anchor expectations close to the midpoint of the range. After lifting borrowing costs by 25 basis points at each of its last three meetings to 4.25%, the MPC is expected to up the pace of tightening on Thursday this week. Of the 20 economists in a Bloomberg survey, 15 predict a half-percentage point increase, with the remainder expecting a smaller 25 basis-point hike. Momentum economist Sanisha Packirisamy and FNB economist Koketso Mano echoed Bloomberg’s expectations of a 50-basis point hike on Thursday. Packirisamy said elevated international oil prices, the potential feedthrough into food prices and an accelerated hiking cycle globally were likely to support a further normalisation in local interest rates to curb inflation expectations. Mano said higher inflation expectations were likely to support a lift in structural inflation, warranting further tightening by the MPC. Anchor Capital investment analyst Casey Delport added that “the upside inflation risks have increased materially given the rand weakness, persistently high oil prices and the recent spike in global food prices.”

• Read the full original of the report in the above regard by Prinesha Naidoo at Moneyweb

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