SA inflation unchanged before key rate decision

South Africa’s inflation rate remained unchanged on the eve of a central financial institution curiosity rate announcement that’s dividing economists and merchants.

Consumer costs rose 5% from a year earlier in October, the identical because the earlier month, Statistics South Africa stated Wednesday in a press release printed on its web site. That matched the median of 18 economists’ estimates in a Bloomberg survey.

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Headline inflation, pushed by rising meals prices and record-high gas costs, has now breached 4.5% — the midpoint of the central financial institution’s goal vary at which it prefers to anchor expectations — for six consecutive months. That, coupled with warnings about upside dangers to the inflation outlook may immediate the South African Reserve Bank to raise the benchmark curiosity rate Thursday and sign a extra aggressive tightening cycle.

The implied coverage rate path of the central financial institution’s quarterly projection mannequin, which it makes use of as a information, signifies a 25-basis level enhance within the remaining quarter of this year and in each quarter of 2022 and 2023.

Of 20 economists in a Bloomberg survey, 11 predict a quarter-point enhance within the benchmark this week, whereas the rest see no change. Forward-rate agreements, used to invest on borrowing prices, sign merchants are pricing in a couple of 70% probability the rate might be raised to three.75% on Thursday and counsel the central financial institution will unwind the unprecedented stimulus it’s offered since 2020 inside two years.

© 2021 Bloomberg

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