South African Reserve Bank likely to keep interest rates unchanged in September

The South African central bank is set to meet this week for its policy decision. According to a Barclays research report, the South African Research Bank is expected to keep interest rates on hold tomorrow. Inflation continues to be subdued and the recent softness in the South African economy is concerning.

Thus, the SARB is expected to focus on the economy. Given the 9 percent depreciation of the South African rand since the July meeting, inflation is expected to start edging up.

“We estimate this could, ceteris paribus, add 50-70bp to the inflation profile, if sustained”, stated Barclays.

This, along with the recent rise in oil prices and signs that food inflation might begin to creep up, signifies that even though the SARB is unlikely to move, policymakers might strike a more hawkish tone, added Barclays.