South Africa Set for Rate Hike as Inflation Flares: Day Guide

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomePMN BusinessSouth Africa Set for Rate Hike as Inflation Flares: Day GuideSouth Africa’s central bank appears set to raise borrowing costs for a second consecutive meeting, as fresh price pressures emerge from intensified fighting in the Middle East.Author of the article: You can save this article by registering for free here. Or sign-in if you have an account.Lesetja Kganyago. Photo by Waldo Swiegers /Photographer: Waldo Swiegers/Blo(Bloomberg) — South Africa’s central bank appears set to raise borrowing costs for a second consecutive meeting, as fresh price pressures emerge from intensified fighting in the Middle East.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountAnnual inflation accelerated to 5% in June, overshooting expectations and moving further above policymaker’s 3% target. As a result, traders hardened bets that Governor Lesetja Kganyago’s monetary policy committee will lift interest rate by 25 basis points to 7.25% on Thursday. That matches the forecast of 17 of 20 economists in a Bloomberg survey. The rest expect a hold.The MPC meeting coincides with escalating hostilities between the US and Iran, triggering concerns that persistently higher oil prices could add to inflationary pressures. Crude has risen roughly 30% since the US and Israel attacked Iran on Feb. 28.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againMike van der Westhuizen, portfolio manager at CAM Asset Management, expects the decision to be finely balanced, with a 60% chance of a 25-basis-point hike.He said Kganyago’s priority will be cooling inflation expectations, which rose to 3.9% in the second quarter, near the top of the central bank’s one percentage point tolerance band either side of its inflation goal.“On the tip of the balance on the scale here, is that they’ll want to keep those inflation expectations in check,” Van der Westhuizen said. “There is no doubt that inflation expectations will remain sticky as long as inflation continues rising.”On top of the energy-market threat from the conflict, food prices are also under pressure via high fertilizer costs, adding to the risks posed by an El Nino weather event, said Lerato Ntuli, economist at Anchor Capital who sees a quarter-point hike.“If sustained, these higher input costs could discourage planting activity, reduce the area under cultivation, constrain agricultural output and ultimately place upward pressure on food prices,” Ntuli said.On the other hand, Investec economist Tertia Jacobs argues that the moment calls for a more balanced assessment of the risks which backs her out-of-consensus call that the MPC will stay on hold.The reserve bank’s pre-emptive hike in May gives officials the opportunity to wait, while a relatively strong rand will support the case for a pause.“It’s not like they are behind the curve,” she said. “The rand is behaving very well. It is stronger than what they’ve plugged into their model. The carry trade is supporting it; that’s an important dynamic as well.”Still, the headwinds from the war mean the central bank’s next meeting in September will be live for a move.“One cannot say that September does not have a probability of a rate hike,” Jacobs said.The Next Africa newsletter runs every weekday. Sign up here for the newsletter, and subscribe to the Next Africa podcast on Apple, Spotify or anywhere you listen.—With assistance from Simon Lee.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.