Home›Forex›EM Currencies›South African rand outlook hinges on SARB rate hike to…

South African rand outlook hinges on SARB rate hike to 7.25%

Commerzbank expects the South African Reserve Bank to reverse part of its 2024 to 2025 easing after June inflation reaccelerated, with both fuel and core components above the central bank’s target range.

Reported · Written up by our desk · EM Currencies

Commerzbank’s Volkmar Baur said it is almost certain the South African Reserve Bank will lift the policy rate by 25 basis points to 7.25%, a move he described as reversing roughly one third of the easing cycle delivered in 2024 and 2025.

Baur tied the call to renewed inflation pressure, citing the latest data showing prices rising at a 5.0% annual pace in June, with gasoline up about 35% year over year and contributing to the shift in the inflation trend.

He also pointed to broadening pressure beyond energy, noting that the core inflation rate, excluding energy and food, increased to 4.1% annually in June, the fastest pace in nearly two years and above the SARB’s 3% plus or minus 1% target range.

For the rand, FXStreet highlighted that future performance likely depends on how resolute the SARB remains, including whether it maintains a hawkish stance and its focus on defending the inflation target, particularly after improvements in the geopolitical backdrop for fossil fuel prices.

Latest closeGasoline (RBOB) $3.293 ▼3.3%

More like this

Sources