Will SARB hike rates?

Consensus expectations are for rates to remain on hold at 6%, but in truth SARB should use last week's dovish Fed meeting to take the market by surprise and hike rates. 

ZAR's aggressive depreciation in recent weeks means that it's only a matter of time before pass through inflation manifests once again. Bear in mind that SARB already expect CPI prints to return towards levels around 6% as base effects kick in over the coming months. 

"So the risk is that ZAR will display a negative real rate profile once again in the not too distant future. That being the case, it makes sense to hike rates today and provide some insurance for when the Fed eventually do raise interest rates in the coming months", says Commerzbank. 

Judging by USD/ZAR price action yesterday, market participants have already discounted SARB remaining on hold as ZAR gave up nearly all of last week's gains following the Fed meeting.