South Africa’s (SA) central bank is under growing pressure as global oil prices soar above $100 a barrel, threatening to derail the country’s inflation outlook.
The SA Reserve Bank is widely expected to maintain the repo rate at 6.75% today, continuing the pause it took in January. But analysts warn the sharp rise in oil prices could force a rethink on policy direction.
Investec Chief Economist Annabel Bishop says the escalation in Middle East tensions is likely to prompt a more hawkish stance from policymakers.
“A small hike, even though it’s not expected, would maybe be pre-emptive in terms of higher inflationary pressures,” Bishop said. “The Reserve Bank will look at its inflation forecast again, especially with oil prices rising from around $65 to over $100 a barrel, which will feed into its models.”
–ChannelAfrica–
