Bottom Line
The SARB surprised with a 50bp rate hike, taking the benchmark repo rate to a 2009-high of 7.75%. The MPC’s voting pattern suggested that not all policymakers were on board with the outsized hike, however, with two of the five members voting for a 25bp move. The accompanying statement suggested that the 50bp rate hike was a result of persistently high price pressures and concerns over the risk of ZAR-weakening capital outflows. It will go a long way in affirming the SARB’s commitment to reining in inflation and inflation expectations and will provide significant support for the ZAR.
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