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South African Interest Rate Decision - 18 July 2019


The South African Reserve Bank (SARB)’s monetary policy committee (MPC) will announce the interest rate decisions today at 15:00 SAST.

Here is what we can possibly expect...

With the U.S Federal Reserve heading towards an expected rate cut later this month the South African Reserve Bank (SARB) might just do the same. The Rand (ZAR) has benefited greatly from a weakening Dollar (USD) but that alone is not enough to stimulate the economy, not even close.

Further economic stimulus is needed and the SARB’s easing of monetary policies might just be what is needed to kick start the economy. Analysts are expecting the MPC to start cutting rates by 25 basis points in July and Bank of America Merrill Lynch (BofAML) is expecting a total of 75 basis over the next six months. 

Interest rates in focus:

  • The Repurchase rate or (Repo Rate) is the rate at which private banks borrow from the SA Reserve Bank, the market consensus is that the current rate might be lowered to 6.50%.
  • The Prime lending rate or (Prime Rate) is our benchmark rate at which the private banks lend out to the public, the outlook is that the Prime rate will also be lowered to 10.00% later today.

Inflation numbers: The next Consumers Price Index (CPI) YoY (Jun) will only be released next week and is expected to come in at 4.2% which is still within the South African Reserve Bank (SARB)’s target range of 3-6 percent.

  • The inflation number is currently watched carefully as a substantial increase in inflation might just trigger the South African Reserve Bank’s monetary policy committee to increase interest rates.

The Rand Outlook:

Not much has changed in the economy since the last South African Reserve Bank (SARB) interest rate decision in May but the international environment certainly has. The U.S FOMC interest rate decision later this month might see an easing of rates which could lead the U.S Dollar to lose steam which would be positive for the Rand (ZAR).

What we might expect to happen today if the SARB gives the greenlight to cut rates is that the local currency might weaken until we see direction from the U.S Federal Reserve.

usd and rand currency chart

Source: Bloomberg

When and what time is the South African interest rate announced in South Africa?

18th July of 2019 at 15.00 SAST.


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