MAMELLO MATIKINCA-NGWENYA, FNB CHIEF ECONOMIST "In total, the repo rate has lifted by a cumulative 425 basis points over nine meetings, from an ultra-low of 3.5% in November 2021. Therefore, the MPC has managed to undo the accommodation provided during the lockdowns while also aiming at guiding inflation expectations back to their preferred 4.5% anchor. "Ahead of this decision, the consensus view was that today’s move would mark the end of the hiking cycle, but the road ahead is precarious as a lift in the cost of doing business and a weaker rand-dollar exchange rate should support stubborn inflation in SA."
SHAUN MURISON, SENIOR MARKET ANALYST AT IG "A revised (higher) outlook towards food and core goods inflation has seen the SARB moving decidedly more hawkishly than markets had expected. "The rand is a short term beneficiary of the surprise decision to hike rates more than was anticipated. However while we are seeing some short term strength, the longer term trend for the domestic currency remains that of depreciation and its fate will largely be dictated by global risk on risk off scenarios and their effects on key export commodity pricing as well."
RAZIA KHAN, MANAGING DIRECTOR, CHIEF ECONOMIST, AFRICA AND MIDDLE EAST, STANDARD CHARTERED "Could this be the last rate hike in the cycle? While the SARB says it will continue to be data dependent, and has raised its own headline inflation forecast for 2023 to 6.0%, we had long expected 7.75% to be the terminal repo rate in this cycle.
"Having frontloaded its tightening, even against the SARB’s own QPM model (7.1%), and with the ZAR rallying strongly in response, there seems – at this point – to be little need to deliver even more rate tightening. Our own forecast sees a slowing in headline inflation to below 5.0% in H2-2023."
PIOTR MATYS, SENIOR FX ANALYST AT IN TOUCH CAPITAL MARKETS
"Today's decision proves that the SARB is fully committed to bring inflation under control. "The 50 bps hike to 7.75% may also provide the rand with a better layer of insulation if/when global sentiment deteriorates again. Perhaps that was one of the factors in favour of surprising the market with a larger than expected hike."
GARY BOOYSEN, PORTFOLIO MANAGER AT RAND SWISS
"The SARB felt it necessary to hike interest rates by 50 bps to firmly anchor inflation expectations around the midpoint of the target band. This is a surprise to financial markets. "So, while South African inflation is largely due to supply constraints, the importance of maintaining the credibility of our central bank vastly outweighs the potential growth benefits of adopting a more dovish approach."
FRANK BLACKMORE, LEAD ECONOMIST AT KPMG SOUTH AFRICA "We expect the SARB is at or approaching the peak of their monetary policy tightening cycle and that more significant decreases in inflation to take place over the second part of the year when base effects are more likely to come into effect, conditional on no further shocks to underlying food and energy prices." "Depending on the size and speed of this reduction in inflation over the rest of this year we could even experience a decrease in interest rates by the end of the year." (Reporting by Shreyashi Sanyal in Bengaluru, Bhargav Acharya, Kopano Gumbi, Anait Miridzhanian in Pretoria and Promit Mukherjee, Nellie Peyton and Tannur Anders in Johannesburg; Compiled by Olivia Kumwenda-Mtambo; Editing by James Macharia Chege)
