Inflation at four-year low before rate decision

With all eyes on Governor Lesetja Kganyago ahead of the MPC meeting on Thursday.

South Africa’s inflation rate declined to a more than four-year low, heralding another reduction in borrowing costs on Thursday.

Consumer prices rose 2.8% in October from a year earlier, compared with 3.8% in the prior month, Pretoria-based Statistics South Africa said Wednesday in a statement on its website. That was slower than the 3% median estimate of 15 economists in a Bloomberg survey.

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Source: Stats SA

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The slowdown to below the lower end of the central bank’s 3% to 6% target range will likely persuade its monetary policy committee to ease monetary policy for the second time in as many months. All 20 economists polled in a separate Bloomberg survey expect the MPC to cut the benchmark rate by a quarter-point to 7.75% on Thursday.

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Still, Governor Lesetja Kganyago will probably reiterate that future decisions will be data dependent with new inflation risks emerging.

Watch the livestream of the MPC’s rate decision here on Thursday at 3pm.

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The rand has depreciated almost 3% against the dollar since Donald Trump won the US election. The currency has also been undermined by risk-off sentiment toward emerging market assets, after Russia’s war with Ukraine entered a dangerous new phase this week when Ukrainian forces carried out their first strike on a border region in Russia using Western-supplied missiles.

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