The SARB assesses food and fuel costs to pose the most upside risk to inflation in the next few months, but these pressures and risks are expected to fade thereafter. In contrast, while the SARB judged fiscal risks to have eased, they may need to move back onto the radar, given the apparent growing pressure for more poverty relief following the recent unrest. We still don’t expect an interest rate hike at the next (September) MPC meeting, but see the odds as tilted slightly in favour of a fourth quarter start to the rate hiking cycle.
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