<\/p>\n
Rising inflation risks from the Iran war-induced oil shock and the US Federal Reserve\u2019s recent decision to raise borrowing costs have prompted Bank of America (BofA) to pencil in two more interest-rate increases by the South African Reserve Bank this year.<\/p>\n
\u201cWe now expect two additional 25 basis point hikes, in September and November, taking the repo rate to a 7.5% peak,\u201d Tatonga Rusike, BofA\u2019s sub-Saharan Africa economist, wrote in a note.<\/p>\n
Read: Fed raises rates, signals another hike as inflation persists<\/p>\n
The forecast contrasts with those of other investment banks, including Morgan Stanley and Goldman Sachs Group Inc, which expect another single 25 basis-point increase in 2026.<\/p>\n
Read: Morgan Stanley sees Sarb rate hike to keep inflation on 3% pathSarb<\/p>\n
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Reserve Bank Governor Lesetja Kganyago will announce the interest-rate decision shortly after 3pm on Wednesday (23 September), with most economists in a Bloomberg survey expecting a quarter-point increase to 7.25%<\/p>\n
Inflation<\/p>\n
BofA, which had previously anticipated a single hike, also adjusted its inflation projections.<\/p>\n
Although inflation expectations \u2013 used to guide policymakers on borrowing costs \u2013 came in softer, dipping to 3.8% in the third quarter from 3.9% previously, oil risks lie ahead, Rusike said.<\/p>\n
Read: South African inflation expectations dip before rate call<\/p>\n
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\u201cIn our previous note, we argued that inflation had likely peaked at 5%,\u201d he said.<\/p>\n
Since then, the US-Iran conflict has reescalated and oil prices have risen above $100 per barrel, materially changing the inflation outlook, he added.<\/p>\n
\u201cWe now expect headline inflation to average 5% in the fourth quarter\u201d and peak at 5.3% in the first quarter of next year.<\/p>\n
The central bank\u2019s easing cycle is also likely to be delayed to the second half of 2027, Rusike said.<\/p>\n
\u00a9 2026 Bloomberg L.P.<\/p>\n
#Bank #America #sees #rate #hikes #year<\/p>\n","protected":false},"excerpt":{"rendered":"
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