JOHANNESBURG - The South African Reserve Bank (SARB) Monetary Policy Committee (MPC) is due to announce its first interest rate decision on Thursday.
South-African interest rates could be kept higher by the MPC of the South African Reserve Bank in order to attract capital inflows; this is according to international financial services company, PriceWaterhouseCoopers (PwC).
The central bank’s monetary policy stance aims to keep inflation in the target range of 3%-6% annually, in order to protect the value of the currency and purchasing power of South African consumers.
The election of Cyril Ramaphosa as party president at the African National Congress (ANC) elective conference has been viewed as market-friendly; lifting investment confidence and hoisting the rand to R12.30-R12.40/$ in the early weeks of January, from R14.40/$ in November 2017.
Merrill Lynch of Bank of America said expectations were that the SARB would keep the repo rate unchanged at 6.75% on Thursday; this, despite the stronger rand and what it sees as an opportunity created by macro fundamentals for a 25 basis-point cut.
Investec chief economist, Annabel Bishop is of the view that SARB's monetary policy outlook has likely become neutral, following the positive impact on the market; following the election of Cyril Ramaphosa as ANC president
"In an environment of tighter global monetary policy, emerging markets like South Africa could face capital outflows, weaker investment appetite and sustained currency weakness, potentially prompting the SARB to keep interest rates higher in an effort to attract capital inflows"" PwC said.