SARB likely to cut its policy rate by 25bps - TDS

Sandeep Kanihama FXStreet Contributor

In line with the consensus, analysts at TD Securities are expecting the SARB to cut its policy rate by 25bps today to 6.5%.

Key Quotes

“In our view a cut would be justified for a number of reasons. Inflation remains low and below the SARB's projections. May CPI stood at 4.5%, a bit higher than April's 4.4%, but still in the middle of the 3-6% target range.”

“Since the last MPC meeting on 23 May the rand is 2.5% stronger on a trade-weighted basis, while Brent crude is down 5% in $ terms. And to cap it all, since the last MPC meeting, monetary policy in the US and the Eurozone has moved in a distinctly more dovish direction - TD now expects easing from both the Fed and ECB this year.”

“We expect the message from the SARB to be moderately dovish, suggesting another cut remains in the pipeline and could be delivered in September, provided data and financial conditions allow.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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