BANK’S TARGET BAND BREACHED
Rates hike not likely despite inflation climb
Runaway inflation has breached the Reserve Bank’s target band, but economists expect the monetary policy committee (MPC) to press pause on an interest rate hike when it meets on Thursday. Inflation for October came in at 6.4%, breaching the Bank’s 3%-6% target band for the ninth time in 2016, after reaching 6.1% in September. Economists had expected inflation to come in between 6.1% and 6.2%. The unexpected rise in inflation was fuelled by increases in food and transport costs, according to Statistics SA data published on Wednesday. Food inflation spiked 11.7% year on year and transport inflation shot up 4.3%. Although it is predicted that the Bank will hold off on hiking interest rates on Thursday, economists predict a 25 basis points hike in early 2017 if the US Federal Reserve raises rates in December.
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