Rand Price Testing Support Ahead of SARB MPC Rates Decision

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The SARB looks set to raise benchmark lending rates by 25 basis points at the upcoming MPC meeting, while inflation remains high and despite a weak growth outlook.

When is the SARB MPC meeting and rates decision?

The South African Reserve Bank (SARB) will conclude its Monetary Policy Committee (MPC) meeting and announce changes (if any) to local lending rates at 3pm on the 30th of March 2023.

Will the SARB raise rates at the MPC meeting?

The South African Reserve Bank is expected to raise the repurchase rate (repo rate) and in turn the prime lending rate by 25 basis points (0.25%). The move would take the repo rate from 7.25% to 7.5% and the prime lending rate from 10.75% to 11%.

The move higher would in turn match recent steps by the US Federal Reserve and Bank of England (BOE), who in the last few weeks have also raised benchmark lending rates by 25 basis points. Higher local lending rates do help stem some capital outflow.


Local inflation continues to trend higher with the last Consumer Price Index (CPI) reading of 7% realized for February 2023 on a year on year (y/y) basis. The figure is a slight uptick from the previous month’s y/y reading of 6.9%.

The SARB’s targets for inflation remain within a 3% to 6% range. Now a softer ZAR and higher food prices as well as transport costs (+13.6% y/y and +9.9% y/y respectively) are providing major inputs to local inflation.

Headline inflation is expected to move back towards and possibly within the 3% to 6% targeted range in the second half of 2023. More hawkish monetary policy coupled with lower fuel costs and some easing of food prices are expected to contribute to a gradual improvement in inflation, although risks thereto remain.


Ongoing power constraints, softer commodity prices and a weaker global economy are expected to weigh on local economic growth. The SARB’s mention of these headwinds in its previous MPC meeting have been echoed recently by the International Monetary Fund (IMF). The IMF has forecast Gross Domestic Product ( GDP ) growth of only 0.1% in 2023 for South Africa, lower than the already fragile 0.4% forecast by the SARB.

The Rand

The rand while clawing back some losses over the last month remains an underperforming currency for the year to date. The recent grey listing, S&P Global’s rating outlook downgrade, drain of State-Owned Entities (SOEs) on the country’s fiscus as well as volatile key export prices have provided negative catalysts to the domestic currency.



The lay of the 20 (red), 50 (green) and 200 (blue) day simple moving averages, suggest the longer-term trend bias for the USD/ZAR to be up (dollar strength / rand weakness).

Over the short to medium term however, the USD/ZAR price trades in a broad range between levels 18.00 (support) and 18.70 (resistance).

The price is currently attempting to rebound off the support of this range. A strong close off this level would suggest 18.40 the initial resistance target from the move. A break of this level would suggest that a retest of the 18.70 level is possible.

Should the 18.00 support level not hold and instead we see a price close below, 17.70 becomes the next support target from the move.

In lieu of the longer-term uptrend bias in play, traders might look for long entry on a bullish move off current support for entry. In the event of a downside break, trend followers might prefer not to try short the currency pair, but rather looks for a bullish reversal at the next level of support (17.70) for long entry.

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