By Kouthar Sambo

The Reserve Bank’s Monetary Policy Committee decided to keep the repo rate at 8.25% despite slightly higher inflation at 4.8%.

This comes after three members of the committee voted to keep rates steady while two members were in favour of a 25-basis point hike.

Speaking on VOC’s Drive Time show today, Head of Research and Portfolio Manager of the Camissa Islamic Funds and Economist Abdul Aziz Davids said the inflation numbers yesterday were approximately 4.7% – 4.8%, almost in line with the midpoint target which is around 4.5%.

“What is interesting is that in today’s developments, there are five voting methods and two of the five were in favour of a 25-basis points increase. That tells me that the bearing and gearing is heading towards a potential hike in the upcoming meetings,” explained Davids.

What the governor and the Reserve Bank try to do, explained Davids, is to manage expectations, as they effectively want to share a sustained level of inflation within their midpoint range which is between 4.5%-4.6% or 4.7%.

“Unfortunately, we are not there yet. What was useful is that they provided a projection of where inflation will be within the next year and the year after. It is interesting that they only expect inflation to hit their 4.5% target by 2025, so for the whole of 2024, they expect inflation to average around 5%-5.1%, which is still above that 4.5% level,” reiterated Davids.

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