SA’s inflation rate above target range

South Africa’s annual consumer inflation rose for the first time in four months, edging to 7.0% in February from 6.9% in January, according to Stats SA.Fin24 recently reported that South African inflation expectations rose at the start of 2023, suggesting the central bank may keep interest rates higher for longer. Average inflation expectations for the year increased to 6.3% in the first quarter from 6.1% previously, according to a survey conducted by the Stellenbosch-based Bureau for Economic Research. The results of the survey influence decision making by the South African Reserve Bank’s monetary policy committee, which prefers to anchor inflation expectations close to the 4.5% midpoint of its target range. The repo rate in South Africa currently stands at 7.25%, while the prime lending rate stands 10.75%. South Africa’s second monetary policy for the year will take place next week on 30 March 2023.Fin24 further reported that that the International Monetary Fund (IMF) praised the South African Reserve Bank (SARB) for successfully anchoring inflation expectations and said it expected inflation to fall within the target range of between 3% and 6% by the end of 2023.The Namibia dollar is pegged to the South African rand. According to IJG Securities, whether Namibia will be spared from further rate hikes will be largely dependent on the SARB’s assessment of the necessity to hike rates even further to bring South Africa’s inflation back within the target range of between 3-6%.The repo rate in Namibia currently stands at 7%, while the prime lending rate stands at 10.75%. According to the Namibia Statistics Agency (NSA), inflation stood at 7.2% in February, compared to 7% in January. The Bank of Namibia’s second monetary policy announcement for the year is expected to take place on 19 April 2023.Meanwhile, the US Federal Reserve raised its benchmark lending rate on Wednesday, as it sought to strike a balance between curbing high inflation and averting further upheaval in the commercial banking sector.The quarter-point increase, which was in line with expectations, lifts the target range to 4.75-5% at the end of a two-day policy meeting, In a statement, the Fed said recent banking sector developments "are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring and inflation," Fin24 reported.-phillep@nmh.com.na

SA’s inflation rate above target range

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SA’s inflation rate above target range

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