South Africa's Rate Decision: Giving Priority To Foreign Investors

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Friday, November 22, 2019   / 03:00PM / United Capital Research / Header Image Credit: Brand Spur

 

Recently, the South African Reserve Bank held its last monetary policy committee meeting for 2019, maintaining the status quo. Despite the widespread expectation of a rate cut, as inflation rate touched a nine-year low, at 3.7% in Oct-19, the MPC kept the country's key policy rate at 6.5%. Accordingly, we highlight our opinion on this decision and share our outlook for 2020.

 

Currently, the South African economy is in a delicate position, stuck between igniting economic growth and limiting severe capital outflows. Earlier, the country escaped a downgrade in its credit rating to junk status from Moody's, but its outlook was revised downward from stable to negative. Bearing the above in mind, we believe the decision to maintain the status quo and not join the global easing bandwagon, must have been spurred by the need to keep foreign investors happy. However, we believe a rate cut will have eased borrowing costs and soften pressures on the country's mounting debt.

 

Looking ahead into 2020, judging by the spread of the policy decision, with two out of five members choosing to cut, the outlook for monetary policy seems commingled but is pointing to an accommodative policy. However, the elephant in the room remains the need for extensive fiscal reforms on the power sector, which could ignite capital investments, and clear the dilemma that monetary policy is encumbered with.

 


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Looking Forward

 

Angola

Nov-19 Policy Rate Decision - November 2

8th Oct-19 Net Reserves - November 29th

 

Ghana 

Nov-19 Policy Rate Decision - November

25th Sep-19 Gross Reserves - November 29th

 

Kenya

Nov-19 Policy Rate Decision - November 25th

Nov-19 Consumer Price Index - November 30th

 

Morocco

Oct-19 CPI YoY - November 22nd

Oct-19 Money Supply M3 YoY - November 29th

 

Nigeria

Q3-19 GDP Report - November 22nd

Nov-19 Policy Rate Decision - November 26th

 

South Africa

Oct-19 Private Sector Credit - November 29th

2020 Budget Presentation - November 29th

 

Mauritius 

Nov-19 Policy Rate Decision - November 27th 

 

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