UBS houseview on SA rates

The South African Reserve Bank (SARB) has announced a 75-basis point hike, taking the repo rate to 6.25 per cent per annum, returning to pre-Covid levels. The move comes amidst a global environment where monetary policy is tightening, with many central banks adopting a hawkish stance in the fight against inflation. Tilmann Kolb, an Emerging Markets Analyst at UBS Global Wealth Management, joined CNBC Africa to provide insight on the Monetary Policy Committee's decision. Kolb highlighted the focus on bringing inflation back to the midpoint of the target range, emphasizing the importance of controlling inflation in the long term. He noted that while a 100-basis point hike at the next meeting is possible, a 75-basis point increase seems more likely given the current uncertainty both locally and globally. Kolb expressed concerns about South Africa's growth outlook, citing factors such as load shedding and weak external demand as potential challenges. Despite moderate changes in the SARB's inflation and growth outlook, he remains cautious about the economic landscape.