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South Africa: Hawkish governor T.T. suggests another hike
Wed, Nov 14 2007, 10:42 GMT
by Stanislava Pravdova
Speaking to the South African parliament’s finance committee, the South African Reserve Bank’s (SARB) governor, T.T. Mboweni said that if he was the only member of the Monetary Policy Committee (MPC) he would definitely tighten monetary policy in December. Furthermore, he said that inflationary pressures are on the upside and higher electricity tariffs likely from next year are "very very severe" for inflation.
While commenting on accelerating food prices, governor T.T said that "overall, you can see that there's really some strong pressure on food prices...I think we should be concerned".
The central bank governor's comments are very hawkish and definitely suggest that he will argue for another 50bp rate hike in December.
Taking into account the governor’s comments and our view that CPIX inflation in October might accelerate even further (perhaps as high as to 7.1% y/y), we expect another 50bp rate hike in December. A further rate hike could definitely be supportive for the rand, however, it is likely that this rate hike has already been priced and the global financial conditions will continue to be the main driver of the South African currency.
Published on Wed, Nov 14 2007, 10:47 GMT
Danske Bank
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