South Africa: February CPI inflation is expected to fall to 4.1% - TDS

According to analysts at TDS, South Africa’s February CPI inflation is expected to fall to 4.1% Y/Y from a prior 4.4%. Core inflation is expected to remain unchanged at 4.1%.

Key Quotes

“With inflation likely to be comfortably below the middle of the 3-6% target range we expect the SARB to cut its policy rate by 25bps to 6.5% at the 28 March MPC meeting. A sharp sell-off of the rand before then could prevent the SARB cutting. The obvious risk event is Moody's review on Friday, but we do not expect a cut in the rating, and, anyway, if the rating is cut, we expect a relatively modest weakening in the rand, of the order of 2.5-3.0%.”

“Also today, Q4 current account deficit as a percentage of GDP is expected at 2.0%, a bit narrower than the prior 2.3%. The deficit has been on a narrowing trend over the past three years as the trade balance has swung from deficit to surplus, in part due to weak domestic demand.”