South Africa's central bank is expected to keep its benchmark interest rate at 5 percent at its last policy meeting of the year, as inflation concerns offset those about weak growth.
All 22 economists polled by Reuters said the Reserve Bank's Monetary Policy Committee (MPC) would leave rates unchanged at 40-year lows at the meeting ending on Thursday.
Nearly half said they expected the next move in rates to be a 50 basis-point hike, most likely towards the end of next year or the beginning of 2014.
Just five of those polled to saw one more rate cut in the next 12 months to boost the flagging economy.
The Reserve Bank trimmed its 2012 growth forecast to 2.6 percent in September from 2.7 percent, citing weak global growth and disruptions to mining output during wage strikes that began in August and have only recently been resolved.
Consumer inflation accelerated to 5.5 percent year-on-year in September from 5 percent in August, edging towards the top end of the Reserve Bank's 3-6 percent target band.
“Even though the economic slump argues for further monetary easing, an upside surprise in headline inflation for September with rising upside risks, the ongoing sell-off in the rand and intensified socioeconomic problems ... might prevent the SARB from lowering interest rates further,” said Danske Bank.
The rand hurtled towards 9.0/dollar last month as investors dumped assets over the often-violent wages strikes in South Africa that took their toll on the world's largest platinum producer.
Although the MPC opted to leave rates unchanged in September after a surprise 50 basis-point cut in July, Governor Gill Marcus said another cut had been discussed.
She has since curbed expectations, however, by stressing that a cut was not automatic, and a sharply weaker currency since the September policy meeting will have raised the red flag on inflation.
RAND POSES INFLATION RISK
The currency continues to hover close to a 3-1/2 low, with the market fretting this week about a renewed flare up of wage protests, this time in the agriculture sector.
But some analysts still see room for further monetary stimulus to the economy in coming months especially as the government, rattled by recent credit downgrades from Moody's and Standard and Poor's, will likely strive to cap spending.
Finance Minister Pravin Gordhan cut growth forecasts for the next three years in his October budget review and predicted a wider deficit but vowed to keep a tight grip on the national purse string to assuage investors' concerns.
This could leave monetary policy as the only possible avenue to breath life into the economy, which the Treasury expects to expand by just 2.5 percent this year, half the average annual growth seen in the five years before a recession in 2009.
“We still expect a rate cut from the SARB in Q1 2013 and that, if there is a risk to such an outcome, it is that easing takes place later rather than not at all,” said Standard Bank analyst Bruce Donald. - Reuters