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BL Premium reports that SA’s headline consumer inflation slowed more than expected in April but core prices remained sticky, leaving the door open for another 50 basis point hike in interest rates when the Reserve Bank ends its monetary policy committee (MPC) meeting on Thursday.
The Bank, which began the tightening cycle in November 2021, has been looking for signs that its actions are having an impact on inflation. But a recent blowout in the rand-dollar exchange rate has raised worries about its impact on prices of imported goods such as fuel. While the headline inflation rate, as measured by the consumer price index (CPI), slowed to an 11-month low of 6.8% in April on an annual basis, core inflation rose 5.3%, from 5.2% in March. Core inflation strips out volatile food and energy and better reflects underlying price pressures. Analysts expect the Bank to tighten policy by 25 basis points to 8%, but financial markets have priced in a larger move, which will put further strain on households with mortgage debt. Nedbank said its base-case scenario was for a 25 basis points hike in policy on Thursday, though there was a chance of 50 basis points given the weaker currency, which could lead the Bank to revise higher its inflation forecast. “We believe that [Thursday’s] hike will be the last in the current cycle and will be followed with steady rates for the remainder of the year. The easing cycle is likely to begin in the first quarter of 2024,” Nedbank said in a note.
- Read the full original of the report in the above regard by Monique Vanek at BusinessLive (subscriber access only)
- Read too, Although inflation cooled in April, price embers still smouldering, at The Citizen
- And also, South Africans face more interest rate hike pain, at Fin24
Get other news reports at the SA Labour News home page