Breaking News: SARB Hikes by 50 Basis Points, USD/ZAR Shoots Lower

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Main highlights from the monetary policy statement:

• The SARB’s forecast for global growth in 2022 is revised down from the March meeting to 3.5% (from 3.7%), and for 2023 is lowered to 2.7% (from 2.8%).
• The SA economy is expected to grow by 1.7% in 2022, revised down from 2.0% at the time of the March meeting – citing electricity constraints and recent mass flooding in KZN
• Overall, and after revisions, the risks to the medium-term domestic growth outlook are assessed to be balanced.
• The current account surplus is expected to reach 2.1% of GDP this year, easing to 0.8% in 2023 and around 0.0% in 2024
• The Bank’s forecast of headline inflation for this year is revised higher to 5.9% (from 5.8%), primarily due to the higher food and fuel prices
• In the near-term, headline inflation has increased well above the mid-point of the inflation target band, and is forecast to breach the target range in the second quarter.

The rand had strengthened against the dollar in the lead up to the announcement and continued the short term trend during and after the announcement

Daily USD/ZAR Chart

Source: TradingView, prepared by Richard Snow

— Written by Richard Snow for DailyFX.com

Contact and follow Richard on Twitter: @RichardSnowFX