SARB hikes repo rate by 25bps to 3.75% versus expected hold at 3.5%
18.11.2021, 13:15

SARB hikes repo rate by 25bps to 3.75% versus expected hold at 3.5%

The South African Reserve Bank (SARB) opted on Thursday to hike their benchmark interest rate by 25bps to 3.75%, marking the bank's first rate hike since the onset of the pandemic. Economists had been split over whether the central bank would hike rates by 25bps or hold them at 3.50%, though a small majority favoured them holding. 

The SARB's Monetary Policy Committee (MPC), which dictates the bank's monetary policy, voted three in favour of the hike to two against. The bank's governor Lesetja Kganyago said that while the Committee expects inflation to stay close to the midpoint of the bank's 3.0-6.0% inflation target, inflation risks had increased. For reference, the YoY rate of South African Consumer Price Inflation (CPI) was at 5.0% in October, data on Wednesday showed. Kaganyago said that future policy decisions would continue to be data-dependent. 

Market Reaction

In the lead-up to the meeting, USD/ZAR was pushing higher and that trend has accelerated in recent trade, despite the unexpected hike from the SARB. USD/ZAR is now above 15.70 and up over 1.7% on the day. 

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