JOHANNESBURG - The South African Reserve Bank is likely to keep interest rates unchanged at the final policy meeting of the year taking place later this week.
The Reserve Bank’s monetary policy committee, chaired by Governor Lesetja Kganyago, sits six times a year, to plot the direction of interest rates, started its final consultation for 2017 on Tuesday.
Kganyago will announce its decision on Thursday afternoon.
This week will be laden with economic data, none of which will eclipse Friday’s credit update assessment from S&P Global Ratings and Moody’s Investor Services, which are both expected to release their year-end credit reviews on South Africa.
A downgrade of SA’s local currency credit rating to sub- investment grade by Moody’s and S&P would result in the exclusion of South Africa’s rand-denominated bonds from key global bond indices such as the Citi World Government Bond Index (Wigbi).
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Last week, Eric Rosengren, the Boston Fed president who also serves on the US Fed, said the strong US economy called for further interest rates hikes, including next month.
The Fed has already raised rates twice this year. His views found support from October’s positive US inflation and retail sales figures, which solidified dominant views that the US economy was ready for further rate hikes.
Kamilla Kaplan, an economist at Investec, said the rand exchange rate, pending electricity tariffs and the pace of global monetary policy normalisation. meant the SA Reserve Bank would again keep interest rates on hold this week.