SARB hikes 75bps
As widely expected, the SARB hiked by 75bps, although the vote under the members was only 3-2 in favour of the 75bps hike. Inflation is expected to be back within the 3% to 6% target band in 2023. We can see another 50bps hike in January from the SARB and then a pause the hiking cycle. It will also depend on what the Federal Reserve does in Dec.
Dollar under pressure
The dollar is still on the back foot, and emerging markets is enjoying the reprieve. The risk-on scenario we have seen in the last 3 weeks or so can perhaps start to run out of steam. The lockdowns in China that is happening again and the lead-up to the next FOMC meeting with a US inflation print beforehand could slam the brakes on. The world is far from a rosy place and with recession talks in most world economies still doing the rounds, a possible retracement could be on the cards. UK headline inflation for Oct printed at 11.1%. USD/ZAR is holding on to the R17.00 level currently. The next big level to rand needs to break to continue lower is weekly close below R16.95. This was a key level back in Aug that we broke when we headed into weaker territory.
Commodities
The signal from the Fed in the minutes last night helped bolster the price of gold. Gold is still holding above $1,750 per ounce. Price action is pretty muted, with the US being out of the market today. Oil still remains under pressure as the China lockdowns will dampen the demand for oil in the short term. The same is happening in the base metal space with copper, aluminum, etc, trading lower on demand concerns from China.
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