Key points

  • Tight credit conditions, a weak local economy, and expectations that the global monetary policy has now peaked and will reverse through 2024 have taken the pressure off the SARB to hike rates further. Any further rate increases will do little to change the local inflation trajectory and will merely add further pressure onto SA’s already fragile economy. The SARB, therefore, is expected to keep rates on hold through the remainder of this year and into early 2024 before potentially embarking on a cutting cycle from the latter half of Q2 2024 onwards.
  • However, the risk to this view remains the volatile ZAR. While the ZAR has appreciated strongly in recent weeks, it remains vulnerable to further bouts of global risk-off conditions, which could be exacerbated by any further escalations in the Israel-Hamas war.



For now, the SARB can sit back in the knowledge that monetary conditions remain tight and inflation should continue to slow. However, it will need to keep a close eye on the performance of the ZAR and global geopolitical factors, which could still force its hand into hiking at least one more time if risk aversion escalates. Therefore, the guidance it will offer will remain conservative, although it is likely that we have seen the peak in rates.