All signs point to another 75 basis point rate hike on Thursday | #daitngscams | #lovescams

The South African Reserve Bank is widely expected to announce another interest rate hike on Thursday afternoon after the meeting of its Monetary Policy Committee.

Motheo Khoaripe interviews Peter Worthington, Senior Economist at Absa.

– On the eve of the Sarb’s interest rate decision, Stats SA announced a slight uptick in consumer price inflation.

– Absa expects the central bank to hike the repo rate by 75 basis points.

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Consumers already struggling with the ever-increasing cost of living are bracing themselves for another interest rate hike expected on Thursday.

The South African Reserve Bank (Sarb) will announce its decision after the Monetary Policy Committee (MPC) concludes its latest meeting.

When the Sarb raised interest rates by another 75 basis points in September, the SA Federation of Trade Unions (Saftu) warned that ordinary South Africans would not be able to keep up.

RELATED: Rate hike: ‘Ordinary South Africans cannot afford another blow of this kind’

On the eve of the interest rate announcement, Stats SA announced a slight uptick in consumer price inflation.

It rose to 7.6% in October, from 7.5% in September.

RELATED: October CPI figure ticks up to 7.6% – Stats SA

Motheo Khoaripe asks Peter Worthington, Senior Economist at Absa, for his thoughts on how big Thursday’s likely increase will be.

Absa forecasts another 75 basis point hike Worthington says.

He explains that there a number of reasons for this forecast outside of Wednesday’s CPI upside “surprise”.

We’re expecting – and indeed the Reserve Bank’s own forecasts show – core CPI inflation continuing to rise… and we’re going to find the Sarb tomorrow publishing inflation forecasts that are revised towards the upside

Peter Worthington, Senior Economist – Absa

Worthington notes that expectations for inflation are still well above the midpoint of the Reserve Bank’s target range and that South Africa still has a negative repo rate.

For all these reasons, he says, they expect the 75 basis point rate hike as opposed to 50 points.

Another factor is that we’re right at this juncture before we go into these illiquid markets over the festive season, and if they think they’re going to have to hike anyway, with some risk events like the ANC elective conference… we think they will be biased to go with the 75 rather than the 50.

Peter Worthington, Senior Economist – Absa

For more of Worthington’s analysis scroll up for the interview audio

This article first appeared on CapeTalk : All signs point to another 75 basis point rate hike on Thursday – economist

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