{"id":272399,"date":"2018-09-19T13:35:55","date_gmt":"2018-09-19T11:35:55","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=272399"},"modified":"2018-09-19T13:35:55","modified_gmt":"2018-09-19T11:35:55","slug":"rand-firms-as-inflation-data-reduces-the-chance-of-an-interest-rate-hike","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/banking\/272399\/rand-firms-as-inflation-data-reduces-the-chance-of-an-interest-rate-hike\/","title":{"rendered":"Rand firms as inflation data reduces the chance of an interest rate hike"},"content":{"rendered":"<div class=\"article-content\">\n<p>The rand firmed in afternoon trade on Wednesday, after Stats SA data showed that inflation grew at a slower rate of 4.9% in August on a year-on-year basis, from 5.1% in July.<\/p>\n<p>The median estimate of 18 economists in a Bloomberg Survey was 5.2%, while the August figure is from a 10-month high.<\/p>\n<p>The release come as the Monetary Policy Committee is meeting in preparation for a announcement on borrowing costs Thursday. Only three of the 19 economists in a Bloomberg survey project that the panel will raise its benchmark rate for the first time since 2016. The rest forecast an unchanged stance of 6.5%.<\/p>\n<p>Core inflation, which excludes the prices of food, non-alcoholic beverages, energy and gasoline, slowed to 4.2% from 4.3%.<\/p>\n<p>The rand traded at the following levels against the major currencies:<\/p>\n<ul>\n<li>Dollar\/Rand: R14.65\u00a0 (-1.48%)<\/li>\n<li>Pound\/Rand: R19.26\u00a0 (-1.60%)<\/li>\n<li>Euro\/Rand: R17.13\u00a0 (-1.34%)<\/li>\n<\/ul>\n<\/div>\n<p>Bianca Botes, corporate treasury manager at Peregrine Treasury Solutions, noted that the rand immediately broke below R14.80\/$, gaining momentum after the\u00a0consumer price index (CPI) inflation figure came in lower than expected at 4.9%.\u00a0 &#8220;This reduces the chance of an interest rate hike,&#8221; she said.<\/p>\n<p>Investec economist Annabel Bishop said in a note that the CPI inflation outcome will alleviate the expected upward trajectory in CPI inflation for the rest of this year and into next year, which will reduce the pressure to hike interest rates.<\/p>\n<p>Adriaan Pask, chief investment officer, PSG Wealth added that indications that South Africa\u2019s economy remained weak at the start of the third quarter of this year make it unlikely that the South African Reserve Bank\u2019s (SARB) monetary policy committee will hike interest rates on Thursday.<\/p>\n<p>&#8220;The third quarter saw a slow start as July\u2019s mining output contracted 5.20% and the manufacturing and retail industries reported modest gains. Economists expect the Reserve Bank to cut its GDP growth forecast for this year from 1.20% to 0.60% or 0.70%.<\/p>\n<p>&#8220;The prolonged emerging-market currency crisis, which caused the rand\u2019s fall to its weakest levels in two years, has raised inflationary expectations. Economists have revised their predictions for the first interest rate hike in months to later this year, rather than early next year.&#8221;<\/p>\n<p>Pask said that PSG Wealth expects the SARB will keep the repo rate on hold. &#8220;As reported in the media, the SARB does not like to hike interest rates during a technical recession, preferring to take a longer-term view.&#8221;<\/p>\n<p>&#8220;Although rate cuts are always the ideal outcome, at least over the short term, we think it\u2019s unlikely,&#8221; Pask said.<\/p>\n<hr \/>\n<p><strong>Read: <a href=\"https:\/\/businesstech.co.za\/news\/finance\/269279\/worst-case-scenario-rand-could-hit-r24-to-the-dollar-by-2019\/\" target=\"_blank\" rel=\"noopener\">Worst-case scenario: rand could hit R24 to the dollar by 2019<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The rand firmed in afternoon trade on Wednesday, after Stats SA data showed that inflation grew at a slower rate of 4.9% in August on a year-on-year basis, from 5.1% in July.<\/p>\n","protected":false},"author":10,"featured_media":269329,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[961],"tags":[26],"class_list":["post-272399","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/272399","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=272399"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/272399\/revisions"}],"predecessor-version":[{"id":272401,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/272399\/revisions\/272401"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/269329"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=272399"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=272399"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=272399"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}