TD Securities analysts think that the balance of probabilities is slightly tilted towards a 25bps cut (59% probability) of the repo rate to 6.25% at today’s SARB meeting as opposed to the consensus expectation for a hold.
“In our view, a cut would be justified for a number of reasons. Inflation remains low, 4.3% y/y in August, below the mid-point of the 3-6% target range and growth continues to be poor. (Yesterday's CPI data printed only 0.1ppt above consensus and only marginally decreases the chances of a cut by, say, 1-2% vs our 59% estimate).”
“Additionally, the global macro environment remains decisively dovish. However, there are several soft factors that may discourage the SARB from taking action. USDZAR moved over 5% higher since July meeting and remains undervalued by SARB standards; rising oil prices in the Middle East and Moody's scheduled review of sovereign rating on 1 November also represent risk factors that may convince the SARB to postpone easing to November.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.