SARB says scope for policy easing has narrowed

By Kopano Gumbi

South Africa’s central bank said on Tuesday that the scope for monetary policy easing had narrowed because of the highly uncertain global backdrop.

In a biannual review of its monetary policy, the South African Reserve Bank (SARB) said the global trade war started by U.S. President Donald Trump was a serious threat to global economic activity, with spillovers expected for South Africa.

Although it expects domestic inflation to slow to 3.6% this year from 4.4% last year, its confidence about the medium-term outlook “has reduced significantly due to heightened global trade tensions and elevated domestic uncertainties”.

The SARB tries to keep inflation around the midpoint of its 3% to 6% target band, with the latest reading at 3.2% in February.

At its last policy meeting in March it held its key rate at 7.50%, citing risks from Trump’s tariffs and a dispute over South Africa’s national budget that has