As you are aware, we entered the present rate hiking cycle in January this year when the repo rate was increased by 50 basis points to 5.5 per cent per annum in reaction to a deteriorating inflation profile, with the Bank’s inflation forecast suggesting that the upper band of the inflation target would be exceeded for an extended period.
The most recent CPI print at 6.6 per cent came out above expectations, which followed recent consumer and producer price data releases signalling a growing passthrough of previous rand depreciation to prices of durable and semi-durable goods.