“We believe that monetary policy is restrictive enough to return inflation to the 4.5% target and, therefore, anticipate mild policy easing throughout 2024,<\/strong>” it said. <\/p>\n\n\n\n![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2023\/10\/nedbank-interest-rates-and-inflation-.jpg\")
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Economists remain divided on where interest rates will head next, with a hold or a hike both on the cards. <\/p>\n\n\n\n
Nedbank’s latest Guide to the Economy shows that inflation has now returned to within the South African Reserve Bank’s target range of 3% to 6%. <\/p>\n\n\n\n
Headline inflation did rise from 4.7% in July to 4.8% in August, with higher fuel prices, a rise in global oil prices and the weaker rand blamed for the slight uptick. <\/p>\n\n\n\n
However, food prices continued to moderate, declining from 14.4% in March to 8.2% in August. <\/p>\n\n\n\n
“Subdued global food prices, less severe load-shedding and private firms\u2019 ongoing transition to renewable electricity sources probably contributed to the downward trend,” Nedbank said. <\/p>\n\n\n\n
Core inflation also increased marginally from 4.7% in July to 4.8% in August but was still off the high of 5.3% in April. <\/p>\n\n\n\n
The group expects inflation to go slightly higher for the rest of the rest of the year due to high global oil prices and a depreciating currency. That said, domestic demand will control the rise in inflation, as companies cannot simply pass cost increases to consumers without hurting sales. <\/p>\n\n\n\n
Inflation is expected to hit just over 5% by the end of the year, before dropping towards 4.5% in the second half of 2024. <\/p>\n\n\n\n
“The outlook still faces considerable upside risks from the cost implications of load-shedding, a vulnerable rand, the threat of El Ni\u00f1o, the impact of the recent bird flu outbreak, and trade restrictions in some countries,” the group said. <\/p>\n\n\n\n
The SARB’s Monetary Policy Committee (MPC) kept interest rates unchanged in July and September, but two of the five members voted for another 25 basis points hike at both meetings. <\/p>\n\n\n\n
“The MPC remained concerned about the upside risks to the inflation outlook due to tight global oil markets, high electricity tariffs, a weak rand, and the threats posed by load shedding, logistical constraints, and potentially drier weather conditions to food prices,” Nedbank said.<\/p>\n\n\n\n
Despite these concerns, it believes the MPC will leave interest rates unchanged for the rest of this year. <\/strong><\/p>\n\n\n\n “We believe that monetary policy is restrictive enough to return inflation to the 4.5% target and, therefore, anticipate mild policy easing throughout 2024,<\/strong>” it said. <\/p>\n\n\n\n<\/a><\/figure><\/div>\n\n\n