Consumers must brace for another interest rate hike when the SA Reserve Bank Monetary Pricing Committee meets this week, economists have warned.
Bureau for Economic Research (BER) economists warned in their Weekly Review that SARB was expected to hike interest rates by another 75bps on Thursday. The RMB/BER Business Confidence Index (BCI) for the fourth quarter will be released on Wednesday, while Stats SA will publish both consumer and producer inflation data for October.
“Headline consumer inflation (CPI) is set to ease slightly from the 7.5% recorded in September, as is producer inflation (PPI). However, amid sustained risks around the inflation outlook, including a softer rand exchange rate than assumed at the previous interest rate meeting, the SA Reserve Bank (SARB) MPC is set to hike its policy interest rate by another 75bps on Thursday,” the BER said.
The baseline was for a 75bps increase, however, indications of an imminent downshift in the pace at which major central banks hike rates, as well as a deteriorating global and domestic growth outlook, implied that a smaller 50bps hike could not be ruled out. “The statement and question and answer session afterwards will be scrutinised for hints of the SARB’s intended policy path going forward. While likely stressing data dependence and the meeting-to-meeting nature of (global) monetary policy decisions of late, markets will be looking for a possible indication that the SARB is nearing the peak of its hiking cycle,” the BER said.
Public sector workers announced their intention to strike on Tuesday, followed by a march to National Treasury on Thursday.
“The government has warned that a ‘no work, no pay’ policy applies and only allows for picketing during breaks, but unions said this would merely be the start of open-ended industrial action should their demand for a 10% wage increase not be met,” it added.
